Monday Update 03/13/2023

 SPY gapped lower to start the week, opening at 381.93 and then falling further to 380.65. SPY then rallied off that low, moving into positive territory, and reaching 387.31. That was right at the 387-390 resistance level I mentioned over the weekend. SPY gave back some of those gains, dropping back to 383.65 before once again moving higher, this time to the upper edge of that resistance zone, topping out at 390.39. The rest of the session was spent in consolidation mode, as SPY fell back near 385 before trying to test the 390.39 high. It fell just short at 389.50 before falling back near 385 and closing at 385.31.

This is the chart I posted in the Weekend Update:

With this morning's opening decline I made some adjustments to the count for the last two hours of trading.

 

 

The count from the high just past 2:00pm turned out to be much more complicated than I originally thought. I will not detail the entire count, but it makes this morning's low the end of a 5 wave sequence that began with the 2:00pm high.

I noted over the weekend that I sometimes place an "X" at the termination points of waves until the count becomes clear. That count did become clear with this morning's low, and I have noted those counts. The first three waves from the Wave D low to the left of the chart became Waves A, B, and C. From Wave C, a 5 wave sequence ensued, terminating with this morning's low, completing Wave D.

In my discussion in Thursday's Update, I described an interesting set-up in the wave structure. We started with Waves A, B, and C, with Wave A being shorter than Wave C, and Wave D then completing below the Wave A origin. This is a bearish formation since Wave E would need to complete below Wave D. This can be negated by a move above the Wave C high. I mention this because the chart above now displays an identical pattern. This structure indicates a termination point for Wave E below 381. This matches almost exactly the targets I have been given for the previous wave of this type. 

If this wave structure holds, it implies a move below 366 before a rebound to below 378, based on some other projections I have worked up.

As I mentioned earlier, this structure can be negated with a move above the Wave C high, which gives some reasonable levels to watch. The Wave C high for the current wave structure is 393.16, and the Wave C high for the first wave I described on Thursday is 401.48. A move above either of those levels would mean some re-evaluation of the waves is needed.

Your support is appreciated.