Wednesday's Market 07/11/12

The market opened modestly lower, but soon rebounded to 1345. Another drop to 1338 followed, after which the market traded in a narrow, up trending range, which brought the market back to 1343.66. The market then underwent another sell off, which took the SPX to the low of the day at 1333.25. At that point the market rallied, bringing it back to 1344.26, before fading into the close.

It appears the market completed wave 3 from 1374 yesterday at 1336.27. The moves from then seem to be either a semi-inverted corrective wave 4, or wave 4 from 1374, followed by waves 1, and 2 of one lesser degree. If this is a semi-inverted corrective wave, we will see a move slightly higher, near 1346, which would complete wave 4 from 1374, with wave 5 following, with a target of 1318.

If wave 4 has already completed at 1345, the move down should start, again with a target near 1318. If the market moves above 1346, it could continue higher, with resistance at 1357-1358, and 1367. A move below 1336.27 means the move down from 1374 is continuing, with a target of 1318.

The key levels for today are 1346, and 1336. A break of either of those levels should give us the short term direction of the market. Longer term, the market should still work lower, although I still view this as a corrective move, with higher prices to come.

Tuesday's Market 07/10/12

The market started the day to the upside on Tuesday, quickly moving up to 1361.54. Yesterday I thought this move would be wave 3 from Monday’s 1346.65 low, but I was wrong. I missed a small wave from 1347, and this move turned out to be wave 5. The market then turned lower, breaking through the 1357-1358 resistance level, and then moving down close to yesterday’s low. After hitting 1348 the market tried to rally, but could only make it back to 1352 before falling again. The selling continued, pretty much unabated, through the afternoon, until the SPX reached 1336.27. A rally off that low brought the market back to 1342.70 shortly before the close.

The action today, after the morning rise, was somewhat unexpected. This market has not been easy to follow as of late, and today was no exception. Longer term, I see still see a continuation of the uptrend at some point, the only question being when. I mentioned over the weekend that a move down to 1325, or 1313, would actually fit better with longer term projections. At the time I saw this as a low probability, with the expectation of a higher move this week.

The move today looked like a completion of 5 waves from 1346, and then 5 waves down to 1336. This would make three waves from 1375, with wave 5 projecting to 1313. So this move still fits within expectations. As I said before, this market has been difficult to read lately. The market could rally further from today’s low, but I see one more move down as probable. Support is at 1326-1323, and 1315-1313, with a target of 1313.

Resistance is at 1357-1357, and 1367. If the market moves above 1361.54, the market may have completed 5 waves down from 1375, and we may see a continuation of the uptrend.

Monday's Market 07/09/12

After completing a 5 wave sequence from 1374.81 on Friday, I was looking for a move higher today. Instead the market moved lower, moving just below Friday’s low of 1348.03. That low turned out to be wave 1 of another sequence lower, which played out today.

The market opened lower, and continued down through the morning. The first low came at 1347.44, and after a rally to 1352, the market out in a slightly lower low at 1346.65. This completed the 5 wave sequence, and the market rallied from that point. It rose to 1353, before falling back towards the previous low, but held at 1347.67. The market then rallied into the close, rising above 1353, before fading into the close.

As I stated above, the action today appears to be the completion of a sequence from the 1375 high. While it is possible for the market to form another sequence from that high, I feel this would only result in slightly lower lows. It does not appear that a 5 wave sequence has completed from today’s low, so I still think the market is headed higher.

Near term I have targets of 1356, or 1368. The 1356 target would be near the 1357-1358 resistance level. This would be wave 3 from today’s low, with another move higher expected after that. If the market moves much below today’s 1346.65 low, the market could be in the midst of a more prolonged corrective wave.

In summary, I am looking for a move higher, with an initial target of 1356, or 1368. This should signal a resumption of the uptrend from 1267. If the market falls below 1346 by a couple of points, this correction could be headed down to 1323-1323, or even 1313-1315.