Wednesday's Market 06/06/2012

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The market opened sharply higher today, reaching our 1294-1296 wave 3 forecast within minutes. After a very slight wave 4 pullback, the SPX rose again, hitting 1303.53. From that point, an inverted corrective wave occurred, lifting the market to 1311, before we finally saw a real move lower. Even this pullback was minor, dropping the index slightly more than five points, before the corrective wave ended at 1305.78. The rally continued from there, with the market rising steadily, closing at the high of the day at 1314.53.

Yesterday I said I expected this wave to reach 1320, and now I think it can move even higher. I believe the market is in wave 5 from the 1267 low, but this wave 5 may push the index quite a bit higher before it’s over. From the 4 completed waves, wave 5 projects above 1333. Using wave 3, one of my secondary relationships points to 1345 as the high. From what has completed of wave 5, it appears we could see a move to 1324, followed by a slight pullback, and then a final move above 1333, with 1356 being the optimum target.

These types of waves lend themselves to very large target ranges, and although they usually terminate in the lower end of that range, there is the possibility that this wave could carry substantially higher than the optimum.

If this wave plays out as I think, it should terminate between 1333 and 1345. I see resistance around 1338. If we move below 1306 at this point, the move from 1267 would most likely be over, and I would look for a further pullback.

Longer term, this wave thus far has appeared to be impulsive. As we mentioned in our Weekend Outlook, the DJIA appears to have completed a semi-inverted corrective wave, which would be bullish for the market.

Thank you for your support.

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.