Wednesday's Market 08/08/12

I was looking for a move up from yesterday’s close, but the market started to the downside today, dropping to 1396.13 near the open. The market rallied from there, turning positive for the day, and moving up to 1404.14. That was as high as the market could get, turning lower after that, and pulling back to 1399.86. Another rally towards the close brought the market back near 1403, before fading slightly into the close.

The drop to 1396 at the open stayed within the parameters of the 5 wave sequence from Tuesday’s 1407 high, although it was slightly more than I had anticipated. This probably discounted the scenario I laid out yesterday, and bringing back into play the count I outlined on Monday. This results in a 5 wave sequence being completed from 1354.65 at 1407.14. A 5 wave sequence then completed at 1396.13, and possibly 4 waves of a sequence completing to the upside today. The target for this wave 5 is around 1405, below the uptrend high of 1407. A move above that would signal a resumption of the uptrend, with resistance at 1426.

It is possible that the market will move lower, below today’s 1396 low. This would most likely carry back down between 1390, and 1370. If the market does fall between those levels, one more move to the upside would still be required. The target for that would be 1426, or above, which puts us right back at the original 1426 target.

Tuesday's Market 08/07/12

As expected, the market opened higher today, moving quickly above 1400, and then to 1402. After a minor pullback, the market climbed to 1404, and then started to move lower. This pullback found support back near 1402. From that point, the rally continued this time taking the market to 1406. After another small pullback the market moved to the day’s high of 1407.14, which also marked a new uptrend high. The market then pulled back through the afternoon, bringing the market back near 1400 just before the close.

The move higher this morning was expected, but took the market slightly above the level I was looking for. This would seem to invalidate the count I was looking at. The market completed a 5 wave sequence from 1354.65 to 1394.16, a sequence from 1394.16 to 1388.69, which was then followed by a 5 wave sequence from 1388.69 to 1399.63. The move down from that high to yesterday afternoon’s 1393.82 low also completed a 5 wave sequence. Today the market completed a 5 wave sequence from that low to 1407.14, and another into this afternoon’s low.

The five 5 wave sequences from 1394.16 meet the criteria of an inverted corrective wave, which makes it most likely that wave 1 from 1354.65 terminated at 1394.16, which was then followed by a 5 wave corrective sequence that terminated this afternoon at 1400.85. This is best seen on the 15 minute chart. If this count proves to be correct, the market should now move higher into my next target of 1435-1475. This move could be fairly quick, with only very minor pullbacks along the way.

Support is at 1387-1397, and then 1376. Resistance is at 1406, and then 1426.

Monday's Market 08/06/12

The market opened higher today, and then moved steadily higher to a new uptrend high of 1399.54. After a minor pullback, the market rose again, moving slightly higher than the previous high, peaking at 1399.63. The market then continued trading in a very narrow range throughout the afternoon, until just before the close. At that point the market fell slightly below that range, moving down to 1393.82, before rising slightly into the close.

From Friday afternoon’s low of 1389, the market completed a 5 wave sequence to the new uptrend high of 1399.54. After that the market appears to have formed a semi-inverted corrective wave, bringing the market down to 1393.92 near the close.

If this count holds, a 5 wave sequence from 1354.65 will complete at 1400-1401. At that point the market would be due for a correction. Since I see this market moving higher, and the 5 wave sequence described above would be wave 1 from 1355, the possibility of a complex correction is fairly high. This would see the market top at 1400-1401, a small pullback, most likely slightly below today’s low, and then a move above 1400-1401. This would signal the next leg of this move higher is underway.

 The corrective wave from today’s high could carry to 1389, a move below that would mean the market completed a 5 wave sequence from 1355 today, and the correction could continue further.  A move above 1401 would also mean a 5 wave sequence completed today, but that the market is headed higher.

Support remains at 1387-1397, 1384, and 1367. Resistance is at 1406, and then 1426.