Wednesday's Market 08/01/12

After a slightly lower opening, the market moved up to 1385, and then fell back to 1378. Another rally took the market to 1384, before a sharp afternoon drop took the market down to 13763. After that the market tried to recover, but only made it back to 1381 before falling back to 1375 near the close.

Yesterday I mentioned 1384 and 1376 as important levels. Except for brief moves above, and below, the market spent the majority of the day trading within those two levels.

The market appears to have completed waves 1, and 2 from 1391.74 this morning. From there, things are a bit more complicated, but it looks like it completed two waves of a second sequence, with wave 2 being a complex inverted corrective wave. I had also mentioned yesterday that a move below yesterday afternoon’s low would probably mean a continuation of the correction from 1392. Today’s move appears to be that continuation.

Support remains at 1367, and 1352. Resistance is 1382 and 1385, and 1393.

Tuesday's Market 07/31/12

The market dropped slightly at the open, falling to 1383 before rebounding to near 1387. The choppiness from yesterday carried over into today, as the market soon fell to 1381. A rally above 1387 was followed by another pullback below 1380. The market rallied one last time to nearly 1385, before falling to the low of the day below 1379 near the close.

It looks like I had the wave structure slightly wrong yesterday. The market did make two moves to the downside as I suggested it might, but it did not carry as low as I thought it might. It now looks like wave 5 from 1391.74 occurred at this morning’s low, and then a larger degree sequence completed at the low near the end of the day.

This wave has formed in such a way, with waves of decreasing length, that the resistance lines are clustered from today’s low, to about 1383.70. The next resistance level would be at 1393, and then 1426. A move above that level, and if the market can hold above that level, would probably result in a move to new uptrend highs.

While my model would allow for very slightly lower lows, a break substantially below, by several points, would most likely mean a rather large move to the downside. Another move to the downside would probably have to result in a complex corrective wave 2, meaning the market could move much lower, perhaps below the 1368 level I am looking at to keep 1497 as the next target.

At the moment I still see the market moving higher. My targets remain either 1426, or 1497. If this level holds, 1497 would be the target.

Resistance is between current levels, and 1383.70, 1393, and 1426. Support is at 1376, 1367, and 1352.

Monday's Market 07/30/12

The market opened slightly higher, moving back over 1387, before moving back under 1385. The market then moved to a new uptrend high at 1391.74. This would appear to be the wave 5 of 3 high, and not Friday’s 1389.19. The market then pulled back, dropping to 1381, before rallying back to 1385.95. The rest of the day was spent in a narrow trading range between 1382, and 1386.

The market formed a clear 5 wave sequence from 1392 to 1381, very near the 1382 support level generated by the wave from 1329 to 1392. The sequence formed after that is a little less clear. It is very close to meeting my model’s criteria, but falls just short. This may be due to the closeness in price of the three peaks, or something else may be forming. If the market falls below 1381.37, I would expect to see another move lower to first 1377-1378, and then near the 1376 support level. If the market moves higher it is possible the market is in the beginning stages of a nested wave that could signal a powerful move.

While 1391 most likely was the completion of wave 3 from 1267, this corrective wave may be quite shallow. In fact, it is possible it has already ended. A breakout to the upside could mean the market is headed to 1497. This correction could carry down to around 1368, and still keep1497 the target. If it completes between 1350 and 1330, the target may move down to 1426.

Support is now at 1382, 1376, 1367, and 1352. Resistance is at 1393, and 1426.

On the chart I posted last Friday, I only showed the major waves, mostly due to the confusion trying to show each wave sometimes leads to. I’ve included a chart today that shows the entire move from 1329, with all waves labeled.