Tuesday Update 02/27/2024

 The markets traded within a narrow band again today, consolidating the gains from late last week, and awaiting some potentially market moving economic data due out later this week. SPY did mange an opening gap higher, reaching 506.74, but immediately reversed direction and headed lower. It fell to 505.53 before bouncing back to 506.58. This would define the trading range that lasted until just before noon. At that point SPY breached the lower end of the range, and drifted under 505 to 504.75 just after 1:00. That marked the low of the day as SPY then rallied through the afternoon up to 507.16, and closed at 506.93.

Today's action did not have a material affect on our count. As described yesterday, SPY is now in Wave 5 of Wave 5 from the October 2022 low.

SPY completed Wave 1 of this 5th wave this past Friday at 510.13. The RSI(5) did turn up from an oversold condition, and the MACD momentum appears poised to move higher. This could indicate we are nearing, or have reached the end of this corrective phase. However, there is the possibility that we could see another move lower, in A - B - C fashion, from the Wave 1 high. This would likely form the first three waves of an inverted corrective wave, with SPY then moving higher.

Our target remains the same for this final wave, with a minimum of 517, and with the shorter term count targeting above 537. 

As readers of this blog know, I have been publishing my 537 target for some time. That would equate to ~ 5370 on the S&P. Glad to see Barklays concurs. 

https://finance.yahoo.com/video/barclays-raises-p-500-target-212917531.html

Monday's Update 02/26/2024

 The market opened marginally higher today, coming off the strong gains of late last week. SPY drifted up to 508.66 in early trading before reversing course and moving lower. That move lasted into late morning, and SPY was down to 507.01 just before 11:30, A small rally attempt lasted until after noon, and SPY was back to 507.88. Another move lower followed, with SPY testing the 506 level, dropping to 506.02 before trying to move higher once again, The rally failed at 507.29, and SPY moved back towards the low of the day. SPY did make a new low for the day just before close, dropping to 505.86, before closing at 505.99.

Our current count remains the same. The late rally last week appears to be the start of Wave 5 of Wave 5 from the October 2022 low of 348.11. It looks as though this Wave 5 is subdividing into a 5 wave sequence with Friday's high marking the completion of Wave 1. Our minimum target for the completion of this final wave is 517, with the smaller magnitude sequence pointing to a high above 337. 

Friday Update 02/23/2024

 The rally following NVDA's earnings report continued into this morning, as we saw another opening gap higher on SPY, propelling it briefly above 510. It hit a high of 510.12 before turning lower, trading between 509 and 510 before breaking lower to the 507 level. Two rally attempts failed at that same 509 level that had earlier offered support. The third attempt only made it to 508.76 before turning lower once again to close at 507.85.

We continue to follow this Wave 5 from the January 5,2024 Wave 4 low of 466.43. We had a minimum target of 517 for this final wave, which we are approaching. Our current structure for this wave gives a slightly higher target, with a minimum of 537.

We will be closely monitoring this final wave for any deviations from our current count.

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Thursday Update 02/22/2024

 The late afternoon rally on Wednesday afternoon certainly foreshadowed what was to occur this morning. All eyes had been on the NVDA earning report, which was due out after the close. NVDA has been on an incredible tear since early January, rising more than 50%. Expectations were high, and the odds of a disappointing report seemed just as high. But NVDA did not disappoint, and the run continued today.

No one who read our report on Wednesday should have been surprised, as we saw NVDA currently in a 5th wave, with a target above 1380. On the heals of that earnings beat, analysts have been falling over each other trying to raise price estimates. One has a high of 1200. Nice to see they are following my lead.

Wednesday Update 02/21/2024

 The day started with a small gap to the downside, with SPY dropping just under the 495 level to 494.91. It seemed to be an indecisive trading day, with NVDA earnings due after the bell. SPY traded in a narrow range for most of the day, staying between 494 - 495. with only slight breakouts on either side. SPY drifted down to 493.56 late in the day, marking the low of the day. That seemed to spark a rally, as a strong move in the final 45 minutes took SPY to 497.37, and closed at 497.21.

We had been looking for SPY to make a move to 490 - 491 to complete an inverted corrective Wave 4, but we never made it down to that level. It is still possible that it will reach that level, but the technical indicators suggest we have seen the bottom of this short term wave. It is likely that we have some more work to the upside before we see one more move lower for the completion of Wave 4. Our overall count remains the same, with a target for SPY above 517, and most likely somewhere near 530.

I posted my Long Term Count for NVDA yesterday on my substack. I will be using that to post counts on NVDA and some other stocks. Be sure to subscribe so you won't miss important updates. In case you missed it. here is the post:

Arguably the most anticipated event of this trading week will be the NVDA earnings, scheduled for Wednesday after close. The historic run in this stock has been well documented over the past year and a half, with the AI frenzy fueling an incredible run over that period. In October 2022 NVDA traded as low as $108.13, and recently traded as high as $746.11. Nearly a seven-fold increase in less than 16 months.

This kind of run has not been unprecedented for NVDA. This run was preceded by an eleven-fold increase from January 2019 to November 2021 when NVDA went from $31.11 to $346.47.

In this post I will outline my long-term count for NVDA. This chart begins with the inception of NVDA and brings us to the current outlook.

The first wave of note terminated in January 2002, and had the high at $6.06. A steep correction followed, bringing NVDA back to $0.60. As you can see, I have these labeled as Wave 1, and Wave a. A multi-year bull run followed after that, with NVDA running up to $9.92 by October 2007. Another correction followed, with NVDA dropping to $1.44. You will notice on the chart that the two corrections so far appear as nearly the same magnitude on the chart. My interpretation is that NVDA started forming an inverted corrective wave from the Wave 1 high, and you see the two waves are labeled as Wave b, and Wave c. In this structure, a 5 wave “corrective” wave occurs, which carries the equity in the direction of the initial impulse Wave 1. It is deemed a corrective wave since the corrective waves a, c, and e are related instead of the impulsive waves, and “inverted” since this wave moves in the direction of the original impulse wave as opposed to a normal corrective wave which would move in the opposite direction.

With the first three waves of the inverted corrective wave complete as a, b, c, the expectation would be to see Wave d move in the impulsive direction, and Wave e to then complete in relation to waves a, and c. We can see that is exactly what happened, as Wave d was extremely powerful, lasting 13 years, and taking NVDA up to a high of $346.47. Also notice the structure of this wave. A Wave 1, followed by an inverted corrective Wave 2, with Wave d being the most powerful wave, and the corrective waves a, c, and e being similar in magnitude. Waves 1, 3, and 5 then complete in relation to each other, which constitutes a completed wave.

Once Wave d completed, Wave e followed, completing in relation to Waves a and c. Since then NVDA has completed Waves 3, and 4, and is now in Wave 5. Again you will notice the resemblance of Waves 3, 4, and 5 (in green) from the lower magnitude Wave d. We often see this type of relationship between different magnitude waves.

With 4 waves completed from the 1999 low, we can project where Wave 5 will terminate. As I said, waves 1, 3, and 5 form a specific relationship, so we can use that to project the Wave 5 high. If the current structure proves correct, Wave 5 will complete above $1365.00.

This information is provided for educational purpose only, and in no way should be taken as investment advice. Trading around earnings can be extremely volatile, and the long term count is not intended to provide directional bias around those earnings.    

Here is an update for today:

From the final Wave 4 on the long term chart, we can follow the development of Wave 5. Wave 1 completed at 505.48, and was followed by what we are calling at the moment Wave a of an inverted corrective wave. Wave b of that inverted corrective wave was extensive, and carried NVDA to an all time high of 746.11. The correction from there has been Wave c, and on shorter time period charts there are indications that that wave has completed. If so, we should see a resumption of the uptrend to complete Wave d.

NVDA Earnings - 5WaveModel Long-Term Count

 

Arguably the most anticipated event of this trading week will be the NVDA earnings, scheduled for Wednesday after close. The historic run in this stock has been well documented over the past year and a half, with the AI frenzy fueling an incredible run over that period. In October 2022 NVDA traded as low as $108.13, and recently traded as high as $746.11. Nearly a seven-fold increase in less than 16 months.

This kind of run has not been unprecedented for NVDA. This run was preceded by an eleven-fold increase from January 2019 to November 2021 when NVDA went from $31.11 to $346.47.

In this post I will outline my long-term count for NVDA. This chart begins with the inception of NVDA and brings us to the current outlook.

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Tuesday Update 02/20/2024

 The markets started the week on a bearish note after the long weekend. A gap down opened the week, as SPY fell to 497.60. The markets continued to work their way lower through the early morning, with SPY eventually falling to 495.75 just after 10:30. SPY tried to rally from there, but only managed to make it 497.30 just after 11:00. Another round of selling took the markets lower during the rest of the morning, and into early afternoon. Shortly after 12:30, SPY fell to it's low of the day at 494.45. From there the markets again tried to stage a rally, and SPY moved higher through most of the afternoon. Soon after 3:00, SPY was sitting at 496.88, but then a sharp drop found it testing the 495 level once again. SPY did rally in the final minutes, fighting back to 496.83 before closing at 496.76.

In our weekend update we detailed our current count, with a focus on the current wave from the January 5,2024 low of 466.43. It is our contention that this is Wave 5 from the October 2022 low of 348.11. We project this wave to complete at a minimum of 517, with a working target of 530. Shorter term we are still looking for a low of 490 - 491. We don't rule out a drop somewhat lower, near 480, but 477 is the lower limit for the current count. We would then expect a move taking SPY above 517.

Weekend Update 02/18/2024

 The week started on a positive note, as SPY opened higher on Monday, getting as high as 503.50 during the morning. It gave up those gains during the afternoon, dropping near the 500 level before closing slightly below Friday's close. A disappointing CPI report sent the market lower on Tuesday, breaking through the 500 level, and back down to the 490 level. The remainder of the week was spent recovering from that drop, with SPY getting back above 500 on Thursday and Friday, but closing the week just below that level at 499.51.

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Friday Update 02/16/2024

 The market opened flat this morning, but quickly made it's way lower in early morning trading. Just after 10:00 SPY fell to 498.75, and once again testing the 500 level. It did find support at that level, and by noon it had rallied to 502.46. SPY drifted lower over the next hour and a half, falling back to test the 500 level once again at 500.74. Another rally off that support took SPY to a new high for the day at 502.87, just after 2:00. That rally quickly evaporated, and Spy soon found itself bouncing around that 500 level. This time that level failed to hold, with SPY dropping to 498.98 before closing just above that at 499.51.

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Thursday Update 02/15/2024

 The rally off Tuesday afternoon's low continued today, as SPY opened to the upside, and continued higher throughout the day. SPY opened with a small gap to the upside, and zeroed in on the 500 level first reached last Friday. Within the first half hour SPY did regain that level, if only momentarily. After hitting a high of 500.38 SPY turned lower. and fell to 498.80 just after 11:00, closing the opening gap. The "buy the dip" mentally took over once again, and SPY moved above 500 once again by 1:00. After one more dip just below the 500 level, SPY moved higher through the rest of the afternoon, hitting a high of 502.20. SPY then fell back towards the 501 area before rallying near the close, and ending the session at 502.01, just off the high of the day.

Our target remains the 517 level as the completion of a 5 wave sequence from the October 2022 lows.

We have been following the wave structure from the Wave 4 low which terminated on January 5,2024.

There seems to be 4 waves completed thus far from that low, which I've identified with the purple X's. If this completes as a simple 5 wave structure, the target to complete this wave, and therefore the entire sequence from the October 2022 low would be above 522, right in line with our longer term target. This wave could still take several forms from here, but we would expect that 517 area to remain the target level.

On the 15 Minute chart we can follow the structure from the last purple X above.

Once again we see four completed waves, denoted by the green X's. From the last wave we can see a Wave 1 to the upside, followed by an inverted corrective Wave 2. If this completes as a simple 5 wave structure, it would terminate near 504. This would not be sufficient to complete the higher wave sequence on the Hourly chart. If SPY does move significantly above 504, we could expect a more complicated wave structure, but would continue to target the 517 level. If 504 does hold here, we would expect another pullback of 9-10 points before resuming the uptrend.

Wednesday Update 2/14/2024

 Most of Tuesday's action was decidedly bearish. After dropping nearly 11 points from Monday's close, SPY staged a late day rally into the close. That rally saw some follow through at the open, as SPY gapped up to 497.30. After a small pause, it continued up to a high of 497.99. At that point the market turned lower, and SPY dropped to 494.40, nearly closing the opening gap. The rally then continued through the afternoon as SPY made a run at the 500 level, moving up to 499.07 before settling back to close at 498.57.

We continue to target the 517 range for the top of this 5 wave sequence from the October 13, 2022 low of 348.11.

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Tuesday Update 2/13/2024

 A disappointing CPI report sent the indices markedly lower at the open, with SPY dropping under 495 to 493.95. After drifting lower still to 493.22, SPY tried to rally back towards 495. It did slightly move above that level into the noon hour, but saw more pressure through the afternoon, falling to a new low for the day at 490.72. That sparked a late day rally that took SPY back above 494 and closed at 494.08.

In the Weekend Update I outlined a scenario that would take SPY above 517 before we saw a correction. If you recall, that scenario featured a wave sequence from October 13, 2022 low of 348.11.

In this scenario SPY is in Wave 5 of a 5 wave sequence that should terminate above 517. 

Weekend Update 02/11/2024

 This week saw a continuation of the rally that has seemingly been non-stop since the October 27,2023 low of 409.21. Monday saw an early pullback of about 4 points from Friday's close, but reversed off the 490.23 low, closing down only slightly. Tuesday saw some continued consolidation as SPY traded in a narrow range between 492 and 495. Wednesday saw the SPY eclipsing Friday's close, with a strong gap up, and continued strength during the remainder of the day that brought SPY within shouting distance of the 500 level. Thursday was another narrow range day, as SPY consolidated just under the 500 level. SPY moved higher again on Friday, and finally did rise above the seemingly inevitable 500 mark. That level then provided support, and SPY closed out the week at 501.20.

On the Daily Chart we can see the 5 wave structure taking shape off the October 13,2022 low of 348.11. The initial rise off the low was choppy, but did complete a 5 wave sequence higher into the February 418.31 high. SPY pulled back into March, but then showed a stronger leg up into July. The market then declined into the end of October, and we can see this as the completion of an inverted corrective wave from the 418.31 high. This would mean that 2 waves of the 5 waves completed at that point. Wave 3 looks to have completed in December, with the slight pullback at the beginning of this year completing Wave 4.

With four waves completed, we can make some projections for the completion of this wave. Given the current count, Wave 5 should complete between 517, and 556. We will be keeping an eye on the 15 and 60 Minute charts to help narrow down that range as we move closer. We will also be looking at some projections for how deep the correction may be.

Tuesday Update 03/28/2023

 SPY opened to the downside this morning, and continued lower most of the day. We can count a 5 wave sequence from yesterday's early morning high as (398.92, 395.56), (398.27, 394.97), (396.21, 393.69), with an R^2 value of .993304. This sequence completed above our targeted range of 391.5-390.7, which increases the probability that the overall wave may be more complex than originally anticipated. 

There are several scenarios at this point, and so it is more relevant to point to levels of interest than describing those options. 391.5-390.7 remains a target on the downside. We can now estimate a range on the upside of 397.6-398.3. Once again this is a very narrow range that is more easily broken to the upside. A move above this level would point to a further upside move with an initial working target of 404-408.

Should the 397.6-398.3 level hold, this still remains a bearish count.

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Monday Update 03/27/2023

 Since I have been following the wave from last Thursday's 390.54 low, I will begin from there. Over the weekend I had set a target for the completion of this wave between 395.7 and 398.2. The wave ultimately completed in a different fashion, and so my target was slightly off. 

 

Here we can see that from that low, SPY completed Wave A at 394.77. Wave B completed at 389.40, and Wave C at 392.52. Wave D was a complex wave that finally terminated at 393.04. We can the see Waves 1, 2, and 3 completing into Friday's close. The slight pullback from Wave 3 into the close became Wave A of a inverted corrective Wave 4. Thus SPY opened to the upside, reaching 398.68 before a slight pullback as 397.88-398.17-397.41. This, combined with the slight pullback into Friday's close, completed Wave 4. SPY made one more move higher, this time to 398.92, which completed Wave 5. This sequence completed as (393.04, 395.14), (394.05, 395.84), (397.41, 398.92), with an R^2 value of .99773. From that point SPY traded in a narrow range between that high and 395.56.

The completion of the 5 wave sequence this morning in turn completed Wave E(Purple), and thus Wave D(Green). This sequence can be seen completing as (390.54, 394.77), (389.40, 392.52), (393.04, 398.92), with an R^2 value of .99818.

 

The completion of Wave D brings us back to the count we have been watching for some time. The target implied by the four completed waves would be between 391.5-390.7. This would then complete Wave D(Red), and and imply lower prices, possibly testing the previous lows. Should this scenario play out, it would look something like a move into the 391.5-390.7 target area, followed by a bounce which could be slight, and then a move below the target area. 

At this point, two alternate scenarios may emerge. The implication of the current structure is bearish. One way to reverse this bearish course is to now break above the Wave D high of 398.92. This would set up a bullish scenario.

That would be the first alternate, with the second alternate pointing to an even more bearish scenario. The target I mentioned for this wave is quite narrow, and in many cases this allows for a "jump" of the target. In essence moving below the target area in this case. This would point to Wave D(Green) being only the first wave of an inverted corrective wave which would carry SPY even lower.

Again, it is difficult to try and get too far ahead of this market. I will continue to closely monitor the situation. The key points for now are the 398.92 high on the upside, and the 391.5-390.7 target on the downside.

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Weekend Update 03/26/2023

 Beginning this discussion with the count from Thursday's 3:00pm low, SPY looks to have completed four waves of a sequence to the upside. In technical parlance this would be described as an expanding triangle, and my model gives a Wave e target between 395.7-398.2.

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For the last few days I have been discussing the re-emergence of a scenario I had relegated to alternate status that now seems to be playing out. As a quick recap, I have counted three waves down from the February 2nd high of 418.31. I had then completed a count showing the March 13th low of 380.65 as the completion of a 5 wave sequence from that high. The alternate scenario entails some complex corrective waves forming from the Wave 3 low. The structure of these corrective waves consisted of the third wave of the correction being longer than the first, and the 4th wave terminating lower than the origin of the first wave. The structure from the Wave 3 low, into the March 13th low contained two such corrective waves, with one possibly having completed Thursday at 399.29. These corrective waves have a very bearish connotation unless it reverses itself and moves above the high of the third wave.

 

Counting from Wave 3(Red), the chart shows three waves up, labeled as Waves A - B and C. From there we have a move down to what I have labeled as Wave A(Green). Originally I had labeled that as Wave D(Red), which may still be the best count. That would infer a move below 377, which would be Wave 4(Red) from 418.31, with Wave 5 to follow. 

The count displayed above would be even more bearish. Taking into account my current target for the current short term wave of 395.7-398.2 would indicate a move below at least 359, depending on the exact termination point of the wave.

Another possibility is that Wave B(Green) is actually a wave A. This would allow SPY to move above the critical 401.48 level, and perhaps reverse the negative connotation of the current wave structure.

We now have some clear levels to watch. If the current short term wave does terminate between 395.7-398.2, and is followed by a move below 390.54, we could see much lower prices in the near future. A move above 401.48 could negate the current scenario.

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Friday Update 03/24/2023

 SPY saw a gap down this morning, opening at 391.98 and falling to a low of 389.40 in the first 20 minutes of trading. The rest of the morning was spent bouncing between that low, and 393. SPY closed the opening gap slightly after noon, and after a small pullback continued steadily higher for the remainder of the day. After hitting a high of 395.84 in the last hour of trading, SPY saw a small pullback before rallying into the close and finishing the day at 395.75.

So far this looks like a corrective sequence from yesterday's Wave 5 low I mentioned yesterday. SPY may be in Wave 5 of that corrective sequence, with a target between today's high, and possibly 398-399. There are a couple of longer term scenarios that I will address in detail over the weekend. The alternate count I have been mentioning the last couple of updates still seems to be in play. Where these next few waves complete could have a major impact on the targets, so I will try and work through some of that also.

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Thursday Update 03/23/2023

 In Wednesday's Update, I stated SPY had completed a 5 wave sequence from Wednesday's high, into the Wednesday afternoon low. I also gave supporting evidence for the 392.07 low as a likely stopping point, if only for the moment. I then said to expect a rally above 399.

SPY did open to the upside, and continued higher until just after 11:00am. This move completed in a 5 wave sequence, (392.07, 397.21), (396.29, 398.51), 398.11, 399.29), with an R^2 value of .993265. This sequence completed just over the 399 level I targeted, which would complete a Wave E of the alternate scenario I discussed yesterday, with yesterday's low being Wave D. 

After reaching that high, SPY turned lower, completing a 5 wave sequence to the downside just before 3:00pm, just above 390. This sequence went (399.29, 397.13), (398.02, 394.75), (396.20, 390.54), with an R^2 value of .996803.

SPY rallied off that low, making back to 394.77. Another move lower to SPY to the low of the day at 390.35, before rallying again to 394.99 shortly before the close.

We seem to be at a critical juncture. A few scenarios point to another run up to near 400 from this point. If that plays out, we may indeed be in this narrow trading range a bit longer. A significant break below the 390 level probably points to a re-test of the lows.

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Wednesday Update 03/22/2023

 In Tuesday's Update I wrote this:

"The initial move today to 398.34 met the requirements to complete Wave 5(Tan), and Wave D(Green). The following pullback to 395.58, while slightly less than the ~5 points I had mentioned, then met the requirements for Wave E(Green), and Wave 4(Green). Wave 5(Green), and the completion of the 5 wave sequence from the March 13th low, then projects to complete between today's late afternoon high, and 418. This would imply that the market is reaching a short term high."

SPY opened flat today, trading in a narrow range between 397-400 while it awaited the Fed announcement. When that came, volatility increased, and the initial reaction seemed to be positive. SPY ran up to 401.70 immediately following the announcement, but quickly dropped back to 397.40. SPY rallied again, this time to 402.49. That was to be the high of the day, as SPY soon fell to a new daily low at 395.67. A rally from that point soon evaporated, as SPY rose to 399.89 before starting a precipitous decline into the close, finishing the day at 392.07.

As it appears SPY has put in a short term top at today's high of 402.49, I can complete the count from the March 13th low of 380.65.

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SPY completed three waves up from that low, at 387.31, 383.65, and 390.39. These are labeled Waves A, B, and C in green. Wave 4 then broke down as an inverted corrective wave, with Waves A, B, and C completing by the 15th. Wave D can then be seen subdividing as Waves 1-5 in tan. This completed as (383.71, 386.57), (388.55, 394.17), (390.73, 398.34), with an R^2 value of .99763. The subsequent drop to 395.58 was Wave E, with Wave 4 completing as (390.39, 385.36), (389.50, 383.71), (398.34, 395.58), with an R^2 value of .99682. The rise into today's high of 402.49 then completed the fifth wave of the entire 5 wave sequence from 380.65 as (380.65, 387.31), (383.65, 390.39), (395.58, 402.49), with an R^2 value of .99999. I have similarly documented most of the smaller waves throughout this sequence in my Daily Updates for those interested.

If this move down is merely a correction of the just completed sequence, we can make some projections. The first projection for a corrective wave suggests a move to between 390.7 - 392.5 with today's low of  392.07 within that range. This projection is based on the start point of the previous sequence, 380.65, the completion point of the sequence, 402.49, the previous high before the completion point of the sequence, in this case Wave D(green), or 398.34, and the correction low. It can be found by solving for (380.65, X), (X, 398.34), (398.34, 402.49), where "X" is the correction low.

Looking at the decline from today's high, we can see three waves down with the third wave subdividing. That subdivision so far is (399.89, 398.00), (399.27, 396.32), (397.43, 392.07). That has an R^2 value of .99887, so if today's low holds, we could see a move higher.

There is one final interesting thing about the decline from today's high. I have been looking at the March 13th low as the completion of a 5 wave sequence from the February 2nd high of 418.31. I did have a more complex count originally, especially concerning the last set of waves going into Wave 5 of that sequence. I originally had the move up into Wave 4(Purple) as three waves. The move into Wave 5 made this a particularly bearish scenario. I had relegated it to alternate status given the recent run-up, but today's action brought it back into play for the moment. The important part at the moment is the move into Wave 5, or alternately, Wave A?. The recent run-up would then be Wave B?. The three wave decline into today's close can then be seen as (393.16, 380.65), (402.49, 395.67), (399.89, 392.07), with an R^2 value of .99826. This count would suggest a move above 399 from today's low. Although originally a bearish scenario, this may now point to continuation of trading within the recent range.

For now, a move below 390.7 would be short term bearish. We may see a bounce from today's low. If we do, a move above 399 seems to point to more volatile swings up and down as we reconcile some of the previous wave structure. Depending on the structure, it may also mean a fresh move to the upside is underway. A bounce below 399, followed by a move below this recent low would also point to a more bearish scenario,

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Tuesday Update 03/21/2023

 In Monday's Update I said I was looking for SPY to move up to the 397-399 level, and then pull back by approximately 5 points. After closing at 393.67 on Monday, SPY gapped up this morning right into that 397-399 range, opening at 397.30. It reached a high of 398.34 just after 10:00am, before pulling back to 395.58 shortly before noon. Shortly after 1:30pm SPY was back up to 397.42. By 2:00 it had pulled back to 396.24, but then rallied strongly into the close, coming close to the 400 level at 399.41 before closing the day at 398.88.

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We have been following the wave sequence from March 13th low of 380.65.

The initial move today to 398.34 met the requirements to complete Wave 5(Tan), and Wave D(Green). The following pullback to 395.58, while slightly less than the ~5 points I had mentioned, then met the requirements for Wave E(Green), and Wave 4(Green). Wave 5(Green), and the completion of the 5 wave sequence from the March 13th low, then projects to complete between today's late afternoon high, and 418. This would imply that the market is reaching a short term high.

While today's action met the requirements for the completion of the above waves, the short term wave structure counts better as a single wave from yesterday's Wave 4 low. This could mean that Wave 4 did not terminate yesterday afternoon, but is itself forming an inverted corrective wave that has yet to complete. This would point to higher prices still to come.

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