The market got off to a rocky start with a gap down opening. SPY hit 403.15 shortly before the open, and made a feeble attempt at a recovery during the opening 15 minutes. This recovery could only lift SPY slightly more than a point before it resumed to the downside. This slide lasted into the afternoon with hardly an attempt at a rally. SPY fell below the 400.00 level dropping to 398.82 before another attempt to the upside was mounted. The 400.00 level then turned into resistance, as SPY topped at 400.16 before falling once again into the close. It closed at 399.14, only slightly above the worst levels of the day.
Looking at the daily chart, one can count a completed 5 wave sequence from the 10/13/2023 low of 348.11 to the 2/2/2023 high of 418.31. This sequence can be counted as 348.11-390.39-368.79-410.49-374.77-418.31. This sequence has an R^2 value of .9965, which satisfies my model.
The first thing I notice about this sequence is that it lacks an extended corrective wave, which one would normally see during an impulse wave. Thus it give the appearance of an A-B-C correction from the 348.11 low. If one draws a tend line connecting the 348.11 low and the 374.77 low, one will notice that the market came very close to that line today, indicating that we may be at an important juncture.
Technically, the Daily SPY chart shows an oversold condition on the RSI, but the MACD shows a bearish crossover.
The shorter term charts have been less clear. One possible count shows a short term 5 wave sequence could complete between 396-386, but the technical action may provide better clarity to shorter term direction.
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