Friday's Market 06/22/2012

The market opened higher today, quickly moving to 1334. As I mentioned yesterday, I was expecting a 3-4-5 formation this morning to complete the inverted corrective wave from 1346.45. The move to 1334 played out just as expected. Again, from there I was expecting another 3-4-5 wave sequence down, to complete the 5 wave sequence from 1363. This, too, played out as expected, with the market moving down to 1327. From there it was mostly up through the day, with the SPX first trading in a narrow range between 1329, and 1331, and then moving higher towards the close. After reaching the high of the day near 1338, the market faded into the close.

As I see it, the SPX completed 3 waves today from the 1327 low. Wave 1 completed at 1331.72, and wave 3 at 1337.82. It looks as if wave 5 of this sequence will take the market back near the 1358 resistance level. Support remains at 1326-1323, and then 1315-1313.

I will give a more complete update over the weekend.

Friday Midday 06/22/12

It appears this morning’s move to 1333.72 was the 3-4-5 wave up I was looking for. The following move down to 1327 was then the final 3-4-5 down from 1363.46. This completes a 5 wave sequence from that high, and possibly wave 4 from 1306.62. There is still the possibility of another sequence down, with a move eclipsing 1327 signaling this. I would then expect support at 1315-1313.

Thursday's Market 06/21/12

This morning the market opened slightly higher, moving up to the 1358 resistance line, and completing a 5 wave sequence from yesterday afternoon’s 1347 low. The market then pulled back to 1349, and then tried to rally. The rally failed to move above 1358, only making it to 1352 before moving lower again. Once the SPX moved below 1347, it headed straight down, barely pausing on its way to 1324.

Yesterday I mentioned some positive wave structures developing, with a move above 1362 meaning a resumption of the uptrend, and a drop below 1347 indicating a continuation of the corrective sequence from 1362, with support between 1326, and 1324.

The contracting wave structure I talked about yesterday theoretically would have meant a break of 1347 would result in ever smaller waves, eventually leading to a move higher. The market circumvented this structure by forming an inverted corrective wave from 1347. This inverted corrective wave also contained an inverted corrective wave, resulting in the steep downward move we saw today. The decline did, however, end today right within the 1326-1323 support area I have identified, which completed a rather complex 5 wave sequence from 1362. This unfortunately only completes 3 waves from 1363, with another wave down to come.

It seems most likely at this point that the 5 wave sequence from 1363 will itself contain an inverted corrective wave 2. From 1363, 1346 would be wave 1, 1362 would then become wave 1 of an inverted corrective wave from 1346. Today’s move would be wave 2 of that inverted corrective wave. Today’s 1324.41 low should be the low of this inverted corrective wave. Wave 3 should be a move higher, probably less than 15 points, a move down terminating above 1324, and another move higher, again probably less than 15 points. At that point we would see waves 3, 4, and 5 complete from 1363. Wave 5 could complete back near today’s levels, or continue down to the next support level at 1313.

Near term, a move above 1327.22 from today’s low would indicate the scenario I outlined above was occurring. If the market breaks 1324, the down move will continue, perhaps to the 1313 support level.

Longer term, I current count remains intact. At this point the market would need to break 1310 before invalidating the current count.

Thank you for your interest.