Tuesday's Market 03/26/2013

Although the market enjoyed a strong move higher today, nothing in that move changed my current view of the wave count I have been talking about since this weekend. That count has Wave 1 from 666.79 terminating at 1370.58. Wave 2 turned out to be a rather lengthy inverted corrective wave that eventually ended last Tuesday at 1538.57. From there I have Waves 3, 4, and 5 terminating at 1561.56, 1543.55, and 1564.91 respectively.

 

The market jumped this morning above 1558 in the opening minutes of trading. The action became a bit choppier from that point, with the SPX hitting 1561.59 before pulling back. That pullback took the market to 1556.45. The market then traded within that range over the next several hours before hitting a new high for the day. The SPX eventually made it to 1563.95, and closed just off that high.

This entire move was the completion of a single 5 Wave sequence from yesterday’s 1546.22 low. Wave 1 ended yesterday at 1555.59, with Wave 2 an inverted corrective wave that completed today at 1556.45. Wave 2 of this wave was also an inverted corrective wave, of which this morning’s spike higher was the main feature. Waves 3, 4, and 5 then completed, with Wave 5 carrying the market to 1560.77. This then became Wave 1 of a higher degree wave. Wave 2 was again an inverted corrective wave, and Wave 5 completed at 1562.95.

With a 5 Wave sequence from 1546.22 now completed, and the market still below yesterday’s high, now would be the time for the market to move lower. I am still looking for a move below 1545.90 to confirm 1564.91 as the completion of Wave 5 from 666.79.

There are several alternatives for the market. If the market manages to make a slightly higher high, it would complete a 5 Wave sequence from 1538.83 Wave 2 low. This would imply that only Wave 3 has completed. A pullback for Wave 4 would be expected, and then at least one more move higher for Wave 5.

If the market breaks through the 1565.5, it would mean that Wave 3 still has further to go. This would then be followed by Waves 4, and 5.  

Thank you. Your interest, support, and comments are much appreciated.

 

 

 

 

 

Monday's Market 03/25/2013

With today’s move to a new uptrend high at 1564.91, my count from this weekend seems to be confirmed. That count had 1563.62 completing a 5 Wave sequence from 1074.77. This in turn completed Wave 2 of an inverted corrective Wave 2 from the May 2011 high of 1370.58. Wave 3 then completed at 1555.74, Wave 4 at 1562.86, and Wave 5 at 1538.57. This concluded Wave 2 from 666.79.

From that point, the market completed a 5 wave up to 1561.56, a 5 wave sequence down to 1545.90, and a 5 wave sequence today at 1564.91. That very well could complete Wave 5 from 666.79. This would be confirmed with a move below 1545.90. Since we stayed above that level today, it is still possible for the market to move higher, and also possible that we are still in Wave 3 from 666.79.

 

After a flat start this morning, the market powered higher, moving to 1564.91. This completed a 5 wave sequence from the 1545.90 low. After hitting the new uptrend high, the market sold off rather quickly, dropping below the previous close, and hitting 1550.68 before trying to move higher. After a small rebound, the market fell again, this time to 1546.22. At that point the market did rally, moving past 1555, and turning positive for the day once again. After falling back to 1548, the market rallied into the close.

 

If the market moves higher from here, 1565, just marginally higher than today’s high, would be my target. If the SPX should hit that level, the implication would be that we are still in Wave 3 from 667.

 

 

 

Weekend Outlook 03/23/2013

In Friday’s post I touched on the possibility that the market completed a 5 Wave sequence from the 1074.77 low, followed by the completion of an inverted corrective wave from 1370.58. Today I will also suggest that the market may have also completed a 5 Wave sequence from 666.79. This does not mean that I am suggesting the market will undergo a severe correction, but it is possible that we will see a significant correction.

I will start with the wave from 1074.77. Wave 1 carried the market to 1292.66, with Wave 2 ending at 1158.66. Wave 3 proved a little more complex, featuring an inverted corrective wave, and terminating at 1422.38. Following that high, the market dropped to 1266.74, completing Wave 4. Wave 5 has been the most complex of all. Wave 1 of 5 formed as a nested inverted corrective wave. Notice the cluster of Wave 1’s near the beginning, and the cluster of 3, 4, 5 Waves near the top at 1470.96, as the wave unwound. Wave 2 of 5 was an inverted corrective wave that ended at 1485.01. Normally wave 4 is the high (or low) point of an inverted corrective wave. Notice that here, Wave 2 proved to be the high. With Wave 2 of 5 completed, Waves 3, 4, and 5 completed shortly thereafter.

 

 

Since September I have been calling for this wave to terminate above 1560. The high of this wave turned out to be 1563.62.

 

 If you look at the Weekly chart, you will see a 5 Wave sequence from 666.79 completed at 1370.58, followed by a correction to 1074.77. With another 5 Wave sequence now completed from 1074.77, the market either completed Wave 3 from 666.79, or Wave 2 of an inverted corrective wave from 1370.58. What occurred from 1563.62 was a 5 Wave sequence down to 1555.74, followed by a 5 Wave sequence up to 1562.86, and then another 5 Wave sequence down to 1538.57. My model is based on mathematical relationships between waves, and the sequence 1370.58-1074.77-1563.62-1555.74-1562.86-1538.57 satisfies my model requirements for an inverted corrective wave. Recall earlier when I cited an example of an inverted corrective wave in which Wave 2 was the high point.

So now my model has been satisfied for Wave 1 from 666.79 at 1370.58, and Wave 2 at 1538.57. What would be expected now are Waves 3, 4, and 5 to complete the sequence. From the 1538.57 low the market completed a 5 Wave sequence at 1561.56. A 5 Wave sequence then formed to the downside at 1543.55. A third 5 Wave sequence then completed at 1557.74. Based on the previous wave structure 666.79-1370.58-1538.57-1561.56-1543.55-1557.74 again satisfies my model for a 5 Wave sequence. This count remains intact as long as the market does not exceed 1587. Put another way, this market has topped unless it can clear 1587.

If we compare several waves, I think I can demonstrate that this is a real possibility. First look at the wave from 1266 to 1563. The waves in red are the largest degree waves. Notice red Wave 1 is comparatively large, with blue Wave 1 (Wave 1 of the inverted corrective wave) proportional to red Wave 1. Wave 2 of that inverted corrective wave was nearly the same length as red Wave 1. After that the remaining waves completed within a much shorter time frame.

 

Compare the previous wave to this one. As you can see the structure is very similar, with the wave culminating with a series of waves completing in quick succession.

 

Now look at the wave from 666.79. I am sorry the waves at the end are a bit hard to decipher, but hopefully you get the idea.

 

If the market can move above 1587 while staying above 1545.90, it would be most likely that Wave 2 from 666.79 has completed, and the market should move significantly higher as it completes Waves 3, 4, and 5.

If the market falls below 1545.90, before moving above 1587, it is most likely that the market has completed a 5 Wave sequence from 666.79. While the wave configuration makes it difficult to be too precise about the severity of the ensuing correction, the lower limit of the first support area would be around 1440.

Even if a 5 Wave sequence has completed from 666.79, the outlook is not entirely bleak. Waves can take many forms, and I will be watching this one closely. Thank you for your interest.