Although the market moved higher again today, it
was a much choppier trading session than yesterday. Along the way, there were a
number of interesting wave formations, and left open a slight possibility that
a 5 Wave sequence has completed from 1540.29.
The market opened slightly lower, falling to
1586.17 before resuming yesterday’s strong rally. From that point it looked
like a continuation from yesterday, as the SPX rose to a high of 1597.35, with
the largest dip being less than two points. Just when it looked like the market
was going to attempt to break 1600, it began to sell off. It quickly fell to
1592, and then came a series of oscillations with slightly lower highs, and
slightly lower lows. From 1592 the SPX went to 1596.75, 1591.43, 1595.63, and
finally 1591.05. The market then rose slightly into the close.
The rise from 1585.33 to 1597.35 contained 5
distinct 5 wave sequences, 1585.33-1589.07-1586.17-1592.32-1590.63-1597.35.
However these individual sequences did not complete a 5 Wave sequence, as the
correlation for this is only .9378, well below my model’s threshold value. This
indicated a more complex wave structure was underway, and indeed I believe that
is what happened. It appears the market is forming a nested inverted corrective
wave structure that should carry the market higher. This structure contains a
wave 1 up, a wave 1 down to initiate the inverted corrective wave, another wave
1 up, followed by another wave 1 down to start a second inverted corrective
wave. I will spare everyone the gory details of how this wave unfolded. The
result was the second inverted corrective wave terminated at 1592.44, and the
second 5 wave structure completed at 1596.75. The first inverted corrective
wave carried the market back down to 1591.05, which leaves us with one 5 Wave
sequence to complete.
If 1591.05 is Wave 2 of this sequence, I would
expect a move above 1597 for Wave 3, a slight pullback, and then Wave 5 near
1605. It was correctly pointed out to me yesterday that I made a calculation
error. I said the sequence from 1567.97 would complete as 1599-1597-1621. It
should have read 1605-1599-1621. I apologize for the error.
When the current sequence from 1567.97 completes
at 1605, it will complete Wave 3 from that point. I would expect a small
correction to 1599, and then a final push to 1621 to complete the 5 Wave
sequence from 1538.57. At that point I would expect a correction, possibly to
1551, before one more rise to slightly higher levels to complete the sequence
from 666.79.
I mentioned at the start that there is a slight
possibility of a 5 Wave sequence having completed from 1540.29. I counted the
move from 1540.29 to 1573.89 as a 5 Wave sequence. The move then from
1567.97-1586.39 completed another sequence, which I see as one degree less than
the first, followed by an inverted corrective wave to 1585.33. Putting the
sequence together from 1540.29 to today’s high gives us 1540.29-1573.89-1567.97-1586.39-1585.33-1597.35.
This sequence has a correlation of .9913, within my model’s threshold. However,
as I described above, I do not see the move from 1585.33 to 1597.35 as a
complete 5 Wave sequence. If it is not, a sequence from 1540.29 cannot be
completed. It is possible that I have misread the wave, and since the sequence
from 1540.29 to 1597.35 does fall within my model’s parameters, it needs to be
considered as a possibility. If the market falls below 1585.33, this will be
the likely scenario, with a target around 1551.
Thank you.
