Wednesday's Quick Update 06/06/2012

Hi everyone. Sorry I’m running a little late. I’m posting a quick update, now, and I’ll be offering a more detailed analysis later this evening.

The way I see it at the moment, wave 3 came in as expected at 1296.34. It now looks like this rally may carry further than I first thought. Given the wave structure from 1267, it now looks like this market will make it to 1345 before it completes this wave. Expect a move into the 1320’s, and then a final push to 1345.

I will provide more details later. Thank you for your support.

Tuesday's Market 06/05/2012

In my view, today’s action was a little curious, and in the end, possibly very interesting. Having put in wave 5 from 1422 at 1267, I was looking for a move above 1282.55 to confirm, and then a move to 1285, or 1294. This would complete wave 3 from 1267. After a lower opening, the market did move past 1283, confirming the 1267 low, and continued higher to 1285. However, the move from yesterday’s 1273 wave 2 low, to 1285, does not appear to be a 5 wave sequence. The market then sold off, moving back down to 1278. For the rest of the day, the SPX moved steadily higher, moving above 1287 shortly before the close.

While the market did move higher today, it did so in a rather subdued manner. Given the wave structure moving down to 1267, I was looking for a sharper move.

The move from 1267 to 1280 was a clearly defined 5 wave structure, as was the decline back to 1273. If the 1285 level proves to have been wave 3 from 1267, wave 5 would project just slightly higher than today’s high. A I said before, the move to 1285 does not seem to be a 5 wave structure, but more likely 3 waves so far. Similarly, the move from the following low at 1278 has not yet completed 5 waves. If we take the move from 1273 to 1285 as 3 waves, and 1278 as wave 4, wave 5 projects to 1296. The wave structure thus far from 1278 started with 2 strong impulse waves, and using those waves we can project a wave 5 termination point at 1294-1296.

We now have three separate projections pointing to 1294-1296, and this seems like the most likely wave 3 termination point from 1267, with waves 4, and 5 left after that. This would be a pretty short term bullish outlook, with wave 5 projecting somewhere around 1320.

If 1285 was wave 3, we should be close to a wave 5 top. With the diminishing wave lengths of 1, 3, and, 5, this would be a more bearish scenario, and would likely mean at least one more low below 1267. A move below 1278 would make this scenario most likely.

At the moment, I see the first scenario as the most likely, and if so, we should see sharper moves higher, with a move above 1290 most likely confirming this.

Monday's Market 06/04/2012

 

Over the weekend, I presented my case for an important bottom to be put in between SPX 1265 and 1270, with 1267 being the optimum target. The market opened higher today moving up to 1282.55. The buying did not last long, as the SPX quickly fell to 1271. The market rallied back to 1278, before moving lower again to the day’s low at 1266.74. A fairly strong rally ensued, pushing the market back to 1280. After a pullback to 1273, the market moved higher once again to 1279.

I believe the rally this morning was wave 4 of a 5 wave sequence from 1422. From there the market completed a 5 wave sequence to 1266.74, which I believe to be the end of a wave 5 from 1422. This last sequence took the same form as many other waves in this move from 1422, with a large 5 wave sequence becoming wave 1 of the next sequence, with waves 2, 3, 4, and 5 being significantly smaller. This generally appears as triangles, or wedges, and usually precipitates a strong move in the opposite direction. Several of these wave types have extended into several series of waves, with the reversal point being wave 4 of the last sequence. This means that it is possible for the same to happen here, with the next sequence moving slightly beyond today’s lows. The next likely most likely support would be 1258, and then 1252. The end of wave 4 in this case is 1282.55, and a move above that would indicate a rally is underway. I am not yet ready to say the correction is over, or that we will now move to new highs, but the rally could be significant.  

Assuming 1267 was wave 5, the move to 1280 would be a wave 1. From that, I would project wave 3 of this sequence to reach 1285, or 1294.

Thank you for supporting our sponsors.