Thursday's Market 07/26/12

As I anticipated, the market moved higher at the open, surpassing my target of 1356. After a gap open, the market continued past the 1357-1358 resistance level, and rose to 1361.51. That level did not hold, however, and the SPX dipped to 1351.48. After that the rally continued, with the market first reaching 1359.10, and then to a new intra-day high at 1363.13. From there, the market moved slightly lower into the close.

The move today continued the rally from Tuesday’s 1329.24 low, in what I consider to be wave 3 of 5 from 1267. This wave should terminate at, or near, 1395-1397.

Short term support is at 1357-1358, 1323-1326, and 1313-1315. Resistance is at 1367, and then 1387-1397.

Very short term, it appears the market is forming a complex wave structure from the 1329 low. I look for a move higher on Friday, with a target of 1366-1367, followed by a pullback to perhaps 1359. This should set the market up for a move to my 1393 wave 3 target.

Wednesday's Market 07/25/12

The market fell slightly to the downside near the open, and then continued the late afternoon rally from yesterday, moving up to 1343.98. This completed a 5 wave sequence from the 1329.24 low, and from there the market moved pretty quickly to the downside. By late morning the SPX hit 1331.50, and then attempted another rally. That rally fell just short of the morning’s high, from which point the market fell back to 1335.87 before rising slightly into the close.

As I mentioned above, the market completed a 5 wave sequence at 1343.98. One of the support lines generated by the sub-waves of that sequence was at 1331.2. The subsequent drop from 1343.98 ended at 1331.50. This completed a 5 wave sequence, as did the move higher from that point to 1343.77. Another support line generated by the move from 1329 to 1344 sits at 1336.2, with the move down from 1343.77 terminating at 1335.87. This also completed a 5 wave sequence.

It still appears that the market put in wave 4 of 3 from 1267 at 1329.24. The target for wave 5 remains around 1395. If the market moves below 1329, it seems most likely that the market completed a 5 wave sequence from 1267 at 1380.39.

Today’s late afternoon low of 1335.87 appears to be the completion of a 5 wave sequence. If the 1329.24 low was wave 4 of 3, the market should move higher from this point, with a near term target of 1346, or 1356. Resistance is at 1338, 1341, and 1356.

If the market moves lower, there is a cluster of support from this level, to 1331, which marks the lowest support level generated by the wave from 1329 to 1344. If the market breaks below that, support is at 1323-1326, and 1313-1315. In my mind a fall below 1329.24 low probably means a 5 wave sequence from 1267 has been completed.

Tuesday's Market 07/24/12

Well, I couldn’t have been more wrong the last two days. I was expecting the market to move higher, to 1397-1398, and instead the market has undergone a substantial sell-off. Although I have apparently misread several waves during this sequence, I still believe the market may stage a rally to 1395 that would complete wave 3 from 1367.

On Monday, the market opened sharply lower, dropping to 1338 before rallying in the afternoon. This rally took the SPX back near the 1357-1357 resistance level, reaching 1353. The sell-off continued into today, with the market moving lower, down to 1340, during the morning. After a small rally attempt to 1345, the market headed lower again. The market paused momentarily after moving below 1332, the SPX put in the low of the day at 1329.24. This level was close to the 1323-1326 support level, and above the previous 1325.41 low I have labeled as wave 2 of 3 from 1267.

From the recent uptrend high of 1380.39, the market has completed a 5 wave sequence at today’s low of 1329.24. This sequence contained an inverted corrective wave 2, which accounted for most of the damage the last two days.

The market is again at a critical level. If it can hold above the 1325.41 low, it still appears that the market is in wave 3 from 1267. The entire move from 1325 to 1380 can be seen as wave 3 of 3, and the move to 1329 wave 4. Given this count, wave 5 still projects into the 1393 level I have been targeting for this wave.

Since I have been wrong several times during this wave, I have gone back and tried to look at as many possibilities as I can. Looking at all these possibilities, there is a count that would make 1380 the termination point of wave 5 from 1267. This sequence would be 1363.46-1309.27-1374.81-1325.41-1380.39. I still don’t see 1267 to 1363.46 as a 5 wave sequence, as it must be for this count, but since this entire sequence has been difficult to identify, I will keep that as a possibility. If the market breaks below 1325.41, this would seem the most likely scenario.

The market is currently right at the 1338 support/resistance line. Resistance is now at 1357-1358, 1367, and then 1387-1397. Support is at 1323-1326, and then 1313-1315.