Wednesday's Market 08/15/12

It was another seemingly lackluster day of trading. After rising yesterday from the 1400.60 wave 5 low, the market pulled back at the open today, falling to 1402. Then, what has passed for a rally the last several days ensued, carrying the market above 1406. The market then pulled back to 1403, before rising in choppy fashion back to 1406. Another pullback to 1404 was followed by another move higher to near 1408. From there the market moved lower once again to 1405 near the close.

This was another day spent in the narrow trading range the market has been in for almost two weeks since the move off the 1354.65 low. Although it has been a narrow range, it still appears to be forming in a bullish fashion. It still looks like 1391.74 was the wave 3 high from 1267. A complex corrective wave 4 followed, which ended at 1395.62. The wave structure from there is still incomplete, and could take several forms, but what I see right now has waves 1-4 completing at 1395.62-1405.98-1397.32-1410.03-1400.60. Today I believe we saw waves 1 and 2 of wave 5 from 1395.62. This should terminate near 1418-1420. This should be wave 1 of the sequence that may take the market to 1497.

I would look for the market to continue higher. The market should move to 1412, and after a very slight pullback, it should continue on to 1420. I continue to look at 1395.62 as the level that would put this scenario in jeopardy. If that level fails, the market could continue down to 1380.

Tuesday's Market 08/14/12

It was another opening gap to the upside this morning, with the market moving above 1410 early on. This was another new uptrend high, and it would also prove to be the high for the day. After dropping back to 1405, the market tried to rally once more, but this rally peaked at 1409.53. The market sold off for most of the rest of the day, with only a slight pause at 1405. This took the market back to 1400 before the market rallied back to near 1404 at the close.

In my weekend update I said I was looking for an initial move to 1410-1414. Although I was a day late, and the wave did not form exactly as I thought, that is the range the market hit today. I would say a 5 wave sequence terminated this morning at 1309.53, and then another sequence to the downside completed at 1400.60. I still see this as the beginning of wave 5 to the upside from 1267. If this plays out, the next target should be 1418-1420.

There is a possible count that makes today’s 1409.53 high the peak of a wave 5 from 1354.65. If this turns out to be the case, I would expect this corrective wave to terminate either near 1395, or 1385-1380. This would possibly change the projection of wave 5 from 1267 to 1426, instead of 1497.

Monday's Market 08/13/12

The market opened slightly higher today, but quickly dropped below 1402. A rally from that point took the market above 1405, but then was met with more selling. By late morning, the market found itself back below 1400, falling to 1397. The midday hours were spent moving steadily higher, and by late afternoon, the market was back near 1405. The market dropped back to 1402, before rallying into the close.

Again the market traded in a narrow range between the 1407, and 1397 support/resistance lines. This continued the trend from last week.

I had expected the market to break out of this range today, but obviously the market needed at least one more day. It now looks like the market completed a 5 wave sequence from last Friday’s low of 1395.62 this morning at 1405.98. A corrective sequence followed, completing at 1397.32. The rally into this afternoon completed another sequence to the upside, which took the market to 1404.65.

My analysis from this weekend remains, with my view being the market completed wave 4 from 1267 Friday at 1395.62. I feel the market will still break out to the upside, with my wave 5 target remaining at 1497. A break below 1395.62 at this point would invalidate this scenario, and likely mean the market would continue lower.