Thursday's Market 06/28/2012

It was another very interesting day for the market. It opened sharply lower, moving below the 1326-1323 support level, and then bouncing back into that zone. The support did not hold, as the market continued down, hitting the 1315 support. After another small bounce, the market hit the low of the day at the 1313 support level. At that point, things got really interesting. The market moved sharply higher, gaining back almost all of the earlier losses.

The short term counts are still a little confusing. At the moment it appears the SPX completed a 5 wave sequence from 1309 at 1320. After a small corrective wave, the market completed another 5 wave sequence of one smaller degree at 1334. Today’s drop was wave 2 of that sequence, with wave 3 currently underway.

Short term resistance should be at 1340-1345, 1350, and 1372. Support remains at 1326-1323, and the 1315-1313.

Longer term, my best count from 1267 remains wave 3 of 3, with a target of 1393.

Wednesday's Market 06/27/12

The market opened higher today, quickly moving above the 1323-1326 resistance level to 1327.54. The market then pulled back into that resistance zone to 1323, before moving higher once again. A strong rally off 1323 brought the SPX to almost 1332, and then dropped to 1323. Another rally took the SPX above 1333 and after one more pullback to 1329, rallied to the high of the day at 1334.40. A dip into the close took the market to 1331, before moving higher just before the close.

Yesterday I outlined two scenarios for the market. The first had the SPX completing wave 2 from 1307 Monday at 1309.27. I saw 3, and possibly 4, waves having been completed from 1309, with wave 5 projected to terminate at 1341. The second scenario assumed that 1363 completed a 5 wave sequence from 1267, and the market was headed lower. The most likely count from 1363 would be an inverted corrective wave 2, with an upper limit of about 1329. Today, when the market moved above that level, that count was eliminated, and the first scenario continues to be the most likely in my view.

It appears 4 waves have completed from 1309, wave 1 at 1320, and wave 3 at 1324. Wave 4 completed Wednesday at 1319.62, along with waves 1, and 2 of 5. Today we saw wave 3 at the open, then an inverted corrective wave 4, which terminated at 1328.86. So far, it appears 4 waves have completed from 1328.86. So now I am looking for wave 5, of 5, of 5 from Monday’s 1309 low. I am raising my projection for that wave to 1349, from 1341. This should complete wave 3 from the 1310.51 low.

 

There is one bearish scenario that suggests a 5 wave sequence being completed at today’s 1334 high. Should the market break below 1328 before making a new high, this count may be in play, and the market could see a sharp decline.

Short term support remains at 1326-1323, and then 1315-1313.

Tuesday's Market 06/26/12

The market opened higher today, continuing the rally from Monday. The SPX hit 1320 within the first fifteen minutes, and then started to sell-off. First, the market fell back to the 1315-1313 support area. After trying to bounce off 1313, the market broke below that support, falling back to 1310. The market found some buyers at that point, breaking back above 1315. From there, the market rallied again, making it back to 1320, and then finding its way to 1323-1324 resistance area. After hitting its high at 1324, the market bounced between 1320 and 1324 into the close, closing near the bottom of that range.

The opening move higher completed a 5 wave sequence from Monday’s 1309 low. Wave 2 then completed at the day’s low of 1310. Another 5 wave sequence completed at 1324, completing 2 waves from Monday’s low. It is possible that wave 4 completed at 1319, with a lesser degree wave 1, and 2 finishing the day.

If this count is correct, wave 5 should terminate above 1340. Both the 5 wave sequence from 1309 and the sub-wave sequence from today’s wave 2, on the 60 minute chart. This scenario would remain intact unless wave 4 carries below the 1313 support level.

The above scenario assumes my current count is correct. That count is wave 1 from 1267 completing at 1336, wave 2 1307, and wave 3 from 1267 underway. Thus far from 1307, I have wave 1 of 3 completing at 1327, and a semi-inverted corrective wave 2 terminating Monday at 1309. This still seems to be the best count, as I still have trouble discerning 5 waves up from 1267.

Although I do not see a 5 wave sequence from 1267, it is possible that it has occurred. The move down from 1363 can also be seen as a wave 1 to 1346, and an inverted corrective wave 2 in progress. Under that scenario, the market would currently be in wave 5 of that sequence. The upper limit for this scenario is a wave 5 high of 1329. A move above that level would nullify that count, with my first scenario remaining intact. Should this inverted corrective wave scenario turn out to be correct, I would expect to see waves 3, 4, and 5 to the downside. This move could be rather sharp, and could carry the market down to the 1297, or 1290 support level. This would not, in my view, necessarily mean the market would move below 1267. It is entirely possible that this would be wave 2 from 1267.

Short-term, I look for a move above 1329, to result in wave 5 terminating above 1340. A move below 1310 would most likely see the market moving down to 1297, or 1290. Support remains at 1315-1313, with resistance still at 1323-1326.