Weekend Outlook 03/17/2013

Again, I apologize for having been away for some time.

In my Weekend Outlook of September 9^th, I said the current wave from the March 2009 low of 666.79 should terminate somewhere above 1560. With that milestone having been achieved this past week, I thought it an appropriate time to try to resume my blog.

Since it has been some time since I posted, and I have updated some of my counts, I will start with the longer term outlook, and work my way down from there. On the weekly chart you can view my count from the 667 low. It is now most likely that a 5 Wave sequence completed at 1370.58. The breakdown for this count would be 666.79-956.23-869.32-1219.80-1010.91-1370.58. The market corrected to 1074.77 from that high, before resuming the uptrend. So far the market has completed two impulsive 5 Wave sequences to the upside from that point, with two intervening corrective sequences. The third sequence to the upside is now unfolding. The target for this wave would be 1608-1664.

 

If we look at the wave structure from the 667 low to 1371, we can see that it was a simple 5 Wave structure, with no complex corrective waves. This would imply that 1370 is Wave 1 of another simple 5 Wave structure higher, with wave 3 shorter than wave 1, and wave 5 shorter than wave 3. A move to 1608-1701 would then complete Wave 3 from 667, and I would expect Wave 4 to follow. This would then require a fairly severe correction, perhaps to 1200-1250, before the uptrend resumes, with an ultimate target of 1688. The 5 Wave sequence from 667 would then be 666.79-1370.58-1074.77-1608-1212-1688.

 

On the Daily chart we can see the progress of the wave from the 1074.77 low. The market has complete 4 waves thus far, with Wave 5 sub-dividing. So far the sequence is 1074.77-1292.66-1158.66-1422.38-1266.74, with a Wave 5 target of 1540-1664. The sub-dividing Wave has also completed 4 waves, 1266.74-1470.96-1343.35-1530.94-1485.01, with a Wave 5 target of 1608-1701. Combining these two targets gives us the 1608-1664 target for Wave 3 from 667.

 

In the near term, the market only needs to complete a 5 Wave sequence from 1485.01 between 1608 and 1664 to complete Wave 3 from 667. This wave has been quite complex, and has two possible course at the moment. The sequence could move higher straight to 1608-1664, or we could see a short term top at 1565. From there I would anticipate a pullback before the resumption to above 1608. The first support level is 1554, and then 1528-1535.

 

If the market clears 1565, the market should move above 1608, with a substantial correction to follow, possibly to 1200-1250. If the market encounters resistance at 1565, and falls below the 1554 support, it could move to 1528-1535 before rising above 1608.

Tuesday's Market 09/25/12

 

The market opened higher today, completing a higher degree 5 wave sequence from 1452.06 at 1462.80, and yet another higher degree sequence at 1463.24. This turned out to be the high of the day, as the market went into selling mode from this point. By early afternoon, the market had fallen below yesterday’s close, and after a short rebound, continued the rather steep decline. A 5 wave sequence from the high was completed at 1450.23, and another higher degree sequence completed at the day’s low of 1441.65.

 

The move higher completed in a sequence of diminishing wave length sequences, which usually precedes a precipitous move in the opposite direction. That proved to be the case as the market moved sharply lower, interestingly enough in another series of diminishing wave length sequences. This may presage a sharp move higher from this point.

The early move higher was expected, but I had not anticipated the sharp move lower that followed. When the market moved below the short term 1449.98 low, my interpretation of an inverted corrective wave 2 playing out from 1438.74 was no longer valid. The most likely scenario at this point is that wave 2 completed at 1428.98, following the 1438.74 high. From there, a 5 wave sequence completed at 1474.51 and another at 1441.65. This could be waves 1, and 2 of the next sequence higher.1428.98 now becomes the critical level. If the market breaks below that, this correction could move longer lived.

 

Short term support is now at 1426. A move above 1448.05 would most likely mean the market is headed higher once again, possibly towards 1497.

Monday's Market 09/24/12

 

The market opened sharply lower today, dropping quickly to 1452.06. After that the market staged a rally that lasted into the afternoon. After rising to 1456, the market fell back to 1453, and then moved higher to 1458. Another pullback dropped the market back to 1454, before the final stage of the rally took the market to 1461. After that the market moved lower into the close, falling to 1456.51.

 

The opening drop today stopped at the lower end of the 1455-1452 support level I mentioned over the weekend. It looks like I had the count from 1466.76 slightly wrong, with this morning’s drop likely the completion of a 5 wave sequence from that high. The rally off the 1452 low formed a 5 wave sequence that ended at 1460.72, which was then followed by a 5 wave corrective sequence down to 1456.51.

 

My current count still has 1438.74 the completion of a 5 wave sequence from the 1267 low, with wave 2 of that sequence likely terminating at 1449.98. I continue to look at 1497 as the next target.

Shorter term, support should remain at 1452. Short term resistance should be 1462 first, and then 1466-1470.