Thursday's Market 09/06/12

After trading in a narrow range for the past two weeks, the market finally broke out today, moving sharply higher. From yesterday’s close near 1404, the market jumped quickly to 1420. After a minor pullback, the market rose above the previous 1426 uptrend high, and reached 1430. At that point the market traded in a tight range, moving higher to 1431, before pulling back to 1428. The SPX then moved higher into the close, closing at the high of the day at 1432.11.

 

When the market hit 1396 on Tuesday, I said if the market was going to rally, it would from rally from that point. 1396 marked the end of a 5 wave sequence from the previous uptrend high of 1426. From 1396, the market formed wave 1 of the current sequence, reaching 1409. By the end of the day yesterday, the market completed a 5 wave corrective sequence, setting the stage for today’s rally. The opening move to 1420 appears to be wave 3 of the sequence, which was followed by an inverted corrective wave 4, which ended at 1428.33. The market should now complete wave 5 between 1446 and 1466.

 

When this wave completes, it should finish a 5 wave sequence from the 1267 low. While this would complete a sequence, I think the market will continue higher after undergoing a correction. The next wave could carry to 1497.

While I think the current wave will continue to 1446-1466, a move below 1428 would probably mean the current move is over, and the 5 wave sequence from 1267 has completed.

 

 

Wednesday's Market 09/05/12

The market again traded in a narrow range today. After a mixed open, the SPX found itself moving lower, falling to 1401 within the first half hour. The market staged a rally from there, moving sharply up to 1409 before stalling out. The market dropped to 1403, before recovering to 1407. Another move lower found the index at 1401 once again, before moving higher into the close. After moving back to 1405, the market dropped back near 1403 towards the close.

 

The move lower this morning completed another 5 wave sequence from yesterday’s 1409 high, with the following rally to 1408 also completing a 5 wave sequence from the low. The remainder of the morning and early afternoon were spent forming a rather complex wave back down to 1401.38.

 

My short term outlook remains unchanged. Yesterday the market completed a 5 wave sequence from 1426, and wave 4 from the 1267 low. The market would then currently be in wave 5, which could terminate anywhere from current levels, up to 1466. 1395 is still the level to watch on the downside. A break through this level would most likely mean wave 5 from 1267 has completed, and a more protracted correction is underway. I would still expect the market to move higher.

 

 

 

 

Tuesday's Market 09/04/12

I apologize for the lack of posts recently. I have been attending to a family emergency, and have not had the time to update.

I will start with today’s market, and try to get up to date. The market started to the downside this morning, opening lower, and then continuing lower to 1399.06. This completed a 5 wave sequence from Friday’s 1413 high. After a brief bounce the market continued down to 1398, and then 1396.56. This appears to have completed another 5 wave sequence from the 1413 high. At that point the market started to rally, slowly at first, and then gaining steam towards the close. After making it into positive territory for the day at 1409, the market slipped slightly into the close, dropping back to 1405.

 

Just to remind everyone of my current count, I see the 1426 high as wave 4 of an inverted corrective wave 4 from the 1266 low. For this scenario to play out, wave 5 of that inverted corrective wave should terminate above 1395, with wave 5 from 1266 to follow. From the 1426 high, the market has now made three moves below 1400, but has remained above 1395 while making slightly lower lows each time. This now appears to complete a 5 wave sequence from 1426, with the market now poised to move higher for wave 5. It is possible for this wave to terminate below 1426, with the upper limit being 1466.

 

There is also a possible count from 667 that would allow for this rally to continue, which at this point I think it will. I will try to give a more detailed analysis of that possibility over the next couple of days.

At this point, if the market falls below 1395, I would expect a further correction, but I believe the market will stay above 1266.