Friday Update 03/17/2023

It was another gap down opening for SPY. It opened at 393.12, and spent the first hour and a half bouncing between 392.24 and 394.40. That was followed by the most damaging move of the day, taking SPY down to 388.56. The remainder of the day was spent in a narrower range between that low and 391.78, although a very slightly lower low was made late in the day at 388.55. 

From yesterday's late afternoon high, we can count the initial move lower to 392.24 as a Wave 1. Wave A of an inverted corrective move occurred soon thereafter at 394.40. Wave B, as is often the case, was the most damaging move of the day. It subdivided into a 5 wave sequence of it's own, which we can count as (394.40, 392.38), (390.98, 389.01), (390.25. 388.56), with an R^2 value of .9967. Waves C, D, and E carried us to the afternoon high of 391.78. This completed Wave 2 as (392.24, 394.40), (388.56, 390.18), (389.76, 391.78) with an R^2 value of .99646. Waves 3, 4, and 5 then carried SPY to the late afternoon low of 388.55. This completed the 5 wave sequence from yesterday's late afternoon high as (396.47, 392.24), (391.78, 389.9), (389.63, 388.55) with an R^2 value of .9967.

Once that low was put in, SPY seems to have managed some constructive work in the last hour. it appears to be the beginning of a sequence that has started with a Wave 1 at 390.05 followed by an inverted corrective wave (390.05, 389.20), (390.87, 389.60), (390.52, 389.44), which has an R^2 value of .99906. If this count proves correct, it implies a move higher.

Widening out to look at the last two days, we can now continue the count from Wednesday's low. From that low, SPY completed two waves higher Wednesday afternoon, and began a fourth wave that terminated Thursday morning. After hitting that low, SPY began yesterday's very strong move to the upside. The move occurred in a 5 wave sequence as (386.29, 394.45), (392.40, 396.14), (393.62, 396.47), with an R^2 value of .99999. Count the first wave off Wednesday low as Wave 1, followed by Waves A, B, and C, yesterday's move becomes Wave D. The sequence from Wave 1 to today's low becomes, (386.57, 385.44), (389.49, 386.29), (396.47, 388.55) which has an R^2 value of .99945.

This count implies that SPY is still in the sequence that started on Wednesday, and is in Wave C of that sequence. Following the completion of this sequence, I would still expect the approximately 5 pint decline I talked about yesterday. So we may be in a trading range waiting on the Fed decision. Time will tell.

I will update some of the other wave structures over the weekend.

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