Monday's Market 04/29/2013

Apparently the market did not like my suggestion of 1566 for the next price level. It seems I was correct about the length of the next move, just a bit off on the direction.

The market gapped up at the open again today, hitting 1588 before pulling back. The move above Friday afternoon’s high signaled an inverted corrective wave was in progress, and that is what occurred. After the pullback the SPX rose again to 1592, pulled back, moved higher to 1595, pulled back, and then hit the high of the day at 1596.65. The market then fell into the close.

The SPX completed a 5 Wave sequence from 1577.56 at today’s high, which now gives us three sequences completed from the 1536.03 low, 1536.03-1592.64-1577.56-1596.65. This, I believe, puts the market in a precarious position. My current count has the current wave from 1536 as Wave D of an inverted corrective wave from 1292.66 October 2011 high. After this wave terminates, I would expect one more move lower before the market continues higher. If this count is correct, a move to 1598 would complete the sequence from 1536, and possibly be the start of Wave E to the downside. Since Wave D would complete beyond Wave C, I would expect Wave E to be less than the 61 point move from 1597 to 1536.

There are a number of possibilities if the market moves up to 1598-1602 and then moves lower. All of these would indicate a move lower, so I will not go into all the details. If the SPX breaks above 1602, it would appear the market will see higher prices before Wave E begins.

The real problem, as I see it, is if the market moves below 1577.56 without making a new high. This would most likely mean that Waves C, D, and E complete at 1536, with the current 3 waves from that low being Waves 3, 4, and 5 from 1074. Looking at it another way, it would mean the entire wave sequence from that point would be complete, and should now be followed minimally by Waves C, D, and E  from May 2011 1370.58 high. Waves 3, 4, and 5 would then complete an entire sequence from 666.79.

This would mean a larger correction than the less than 61 point move in the first scenario, but still most likely within expectations. There is one possible count however, that would indicate the start of a major correction from today’s high.

I will not get too far ahead of myself, so I will take this one step at a time. For now, a move to 1598, followed by a pullback would probably indicate a minor, less than 61 point correction. A move above 1602 and we should see higher prices before the current wave completes. A move below 1577, without making a new high, would most likely mean a larger correction is underway.

Thank you.

Friday's Market 04/26/2013

The market opened flat today, meandered lower, and then rallied to 1586. When that rally fizzled, the SPX continued the move lower from the 1592 high. The SPX completed a 5 Wave sequence from that high at 1579.62, and then continued lower, completing a larger degree sequence from that high at 1577.56. At that point the market staged a pretty good rally, rising to 1585.68, where it completed a sequence from the short term low, and then moved lower into the close.

The 1592.64 high marked the termination point of a 5 Wave sequence off the 1536.03 low. From that point, the SPX has now completed a sequence to the downside, followed by a sequence higher. It is still unclear as to whether this is the start of the next move lower, which take out the 1536 low, or a corrective wave indicating another move above 1597. Short term, I think the next move is lower, with a target of 1566. I will provide a more detailed update over the weekend.

Thank you.

Thursday's Market 04/25/2013

In yesterday’s post I said a 5 Wave sequence from 1563.03 could complete something like 1587-1585-1591. Today it did complete as 1586.33-1585.55-1590.47. But the market was not quite done, as it then also completed a sequence from the 1536.03 low.

It was another gap up opening for the market, with the SPX reaching 1585 earl on. The market then pulled back to 1581 before continuing the move higher. And move higher it did, hitting 1586.33, pulling back slightly to 1585.55, and then reaching 1590.47. After dipping less than three points, the SPX kept rising until it hit 1592.64. A sell-off took hold from there, with the SPX falling to 1583 before moving slightly higher into the close.

The initial move today completed a 5 Wave sequence from 1563.03. As I mentioned a couple of days ago, it was then possible that a complex corrective wave would form from the 1579.58 high. The SPX did just that, completing that corrective wave at 1587.85 (1579.58-1563.03-1590.47-1588.77-1590.21-1587.85). Following that a sequence completed from the 1536.03 low as 1536.03-1579.58-1587.85-1591.76-1590.89-1592.64.The sell-off to 1583.23 then completed a sequence from that high, right at a support level indicated by the previous wave.

With a 5 Wave sequence completed from the 1536.03, the question is now whether the market will resume the downtrend from 1597. If this is not the end of the current move, we are likely very close to the end. At the moment I will remain neutral as to the direction of the next move, but will be looking for a specific scenario that would indicate the end of this move.

The next resistance level is 1595-1598. If the SPX moves into that level, pulls back, and then makes another higher high, it would complete another sequence from 1536 as a rising wedge. A breakout from that wedge would indicate the next move to the downside is underway.

As mentioned, the next resistance is 1595-1598, with the next support level at 1566.

Thank you.