Thursday's Market 04/18/2013

In yesterday’s post I said the SPX had completed three 5 Wave sequences from 1597.35, 1552.58-1575.35-1543.69, and possibly a fourth sequence at 1555.15. I said that if the market moved down to 1535, it would complete a 5 Wave sequence from the high, and that I would then expect a rally. Late this afternoon the SPX hit a low of 1536.03.

The market opened slightly higher this morning, but did not exceed yesterday’s high. Soon the market continued to the downside, falling to 1541.40. The SPX then rallied to 1552, and then spent most of the remainder of the day trading within that range. By mid-afternoon the market started heading lower again, hitting the 1536.03 low, before rallying towards the close.

It does appear that Wave 4 from 1597.35 did complete yesterday afternoon at 1555.15. The market from there completed a 5 Wave sequence into today’s low, 1555.15-1541.40-1552.17-1539.46-1542.37-1536.03. This sequence terminated within the range target for Wave 5 from 1597. Therefore it is most likely that a sequence has completed at this point, and a rally should come next. A likely target for this correction should be around 1561. From there I would expect another move down near 1500.

Thank you.

Wednesday's Market 04/17/2013

It has been fairly apparent that my count from SPX 1358 has not been correct. I had been counting the move from 1563.62 to 1538.57 as the completion of Waves 3, 4, and 5 from 1370.58. I was then expecting Waves 3, 4, and 5 higher to complete the sequence from 666.79.

From 1538.57 I counted three waves up to 1573.66 (1538.57-1564.91-1546.22-1573.66), three waves down to 1540.29 (1573.66-1549.80-1562.60-1540.29, three waves up (1540.29-1573.89-1567.97-1597.35). All of these three wave sequences, without completing a 5 Wave sequence, is quite unexpected. The action from 1563.62 has been more reminiscent of the unwinding of inverted corrective waves. It is now my opinion that the move from the 1074.77 low has contained many more nested waves than I originally thought. Waves 1, 2, 3, and 4 as labeled in pink on my Daily and Weekly chart now appear to be a series of nested ones. The current move lower from the 1597.35 high should be waves 3, 4, and 5 from 1292.66 (Pink Wave 1). Once this sequence has completed, the market would need to move higher to complete the sequence from 1074.77. This would be followed by a correction to complete the inverted corrective sequence from 1370.58, and another move higher to complete the sequence from 666.79.

Today the market gapped lower, falling to 1558 before attempting a rally. That attempt did not last long, as the SPX worked its way lower, finally settling at 1543.69. At that point the market did move higher, rising to 1555 before settling back into the close.

The SPX completed a 5 Wave sequence from 1575.38 at 1546.08, which became Wave 1 of a larger degree sequence. After a move higher to 1551.93, the market fell to 1543.69, to complete this higher degree sequence. The market then moved higher, and completed a 4 Wave sequence at 1555.15.

From 1597.35 the market has completed three 5 Wave sequences, 1597.35-1552.58-1575.35-1543.69. There are several possibilities at this point. If the market moves lower at the open, a drop to 1535 would complete a 5 Wave sequence from 1597.35. I would then expect a move higher, followed by one more move lower. If the market continues to rally off today’s low, I would expect it not to exceed 1575, and be followed by another move lower to 1530-1485. If the market moves below 1530 at the open, the SPX should bottom above 1485, with that being the low from 1597.35, and the beginning of the next rally.

Thank you.

Tuesday's Market 04/16/2013

In the past week, the market has gone up thirty points, dropped forty-five, and up twenty-three. There is a very interesting count developing which could bring us right back where we were a week ago, and with the same target; 1619.

The market opened markedly higher today, in sharp contrast to the action from yesterday. The market popped above 1563, and the quickly found itself at 1566. The market then began to fall back, dropping to 1559.93 before regaining its footing. The rally then continued, as the SPX ran up to 1573.03 with only minor pullbacks. After hitting 1573, the market fell back once again. But a drop to 1567.64 was soon followed by a rally to a new intra-day high at 1575.35.

Yesterday I said the market had completed a 5 Wave sequence to the downside, and a move above 1559 would signal a resumption of the move higher. With the market opening above that level at today’s open, that remains the strongest possibility. The SPX completed Waves 1, 2, and 3 of a 5 wave advance today. The opening pop to 1566.22 was Wave 1. Wave 2 was an inverted corrective wave, with Waves 1, 2, and 3 completing at 1559.93. Wave 4 was then the more powerful move to 1573.03, and was followed by Wave 5 at 1567.64, to complete Wave 2 from 1552.58. The rally into the close at the moment appears to be Wave 3 of that sequence. It is possible that Wave 4 completed with the slight dip into the close. If it did Wave 5 should complete at 1579-1580.

With the current structure of today’s partially completed wave, it would appear to be a corrective wave as opposed to an impulsive one, which becomes problematical if the market is to move higher. The market may be able to rectify this seeming inconsistency however. If the SPX completes this sequence at 1579-1580, there should be support near 1565. The sequence 1573.89-1567.97-1597.35-1552.58-1579-1565 would actually complete a 5 wave corrective sequence from 1573.89. That would complete Wave 4 from 1538.57, and give a target for Wave 5 of 1619 once again. It would be extremely unusual for a wave to form in this fashion, but this has been a very unusual market for some time.

I still consider the market to be up trending from the 1538.57 low. An open above the 1580 level would seem to confirm this. My first target would be the 1598-1612 area. If the SPX drops below 1538.57 I will consider this uptrend to be over.

Thank you.