Wednesday's Market 05/08/2013

The seemingly endless uptrend from 1581.28 continued today, with the SPX recording yet another record high.

After starting the day to the downside, and working down to 1622.70, the SPX then continued higher, reaching another all-time high at 1631.19. After a pullback to 1626.46, the SPX made one more new high towards the close at 1632.78.

Since the SPX hit 1618.46 last Friday, it has moved ever higher, with only minor pullbacks of 4 to 6 points. Support is at 1623, and 1607. The 1623 support level is interesting in that a move to that level could complete an inverted corrective wave from 1618.46. If that support holds, we could see the market move still higher before the sequence from 1581 finally completes. A level around 1645 would be a target if this were to materialize. I still see this as Wave 3 from 1074.77. When this wave does complete, we should see a minor correction, followed by another move higher before a larger correction.

Thank you.

Tuesday's Market 05/07/2013

It is beginning to sound like a broken record; “Another record setting day on Wall Street. But it was, as the SPX hit another all-time high. I think the markets are ready for a pause here, before resuming the uptrend.

The SPX gapped higher again today, reaching a fresh high at 1623.74 before pulling back. The pullback was pretty steep, but reversed course after closing the opening gap. From there it was more of the same, as the SPX continued higher throughout the day, with only minor pullbacks. After hitting 1626.03, it did pull back into the close.

The SPX formed an inverted corrective wave from yesterday afternoon’s 1619.77 high, and then completed a 5 wave sequence from 1612.85 at 1623.74. This appears to be the end of Wave 3 from 1581.28. The sharp pullback this morning was then Wave 4, and Wave 5 completed at 1624.23. The market was not quite done, however, as it completed a larger degree sequence from 1581.28 at 1626.03. This appears to be the end of the wave from 1581, and most likely Wave 3 from 1074.77. I would expect a pullback at this point, with support at 1621, and then 1609. I would expect that to be the end of Wave 4, which should be followed by one more move higher before a more substantial correction occurs.

Normally with this wave structure, a move below the previous wave 4 (1623.90), signals the top of the wave has occurred. If the SPX falls below 1616.64 I would be fairly certain that the top is in. If the SPX rise above 1626.03, we would most likely see another sequence develop from the 1581.28 low.

Thank you.

Monday's Market 05/06/2013

I was expecting a continuation of the pullback from Friday’s record high, but that did not materialize. Instead the market moved higher and recorded yet another all-time high. This may have put the market in a precarious situation, however, as I will explain in a minute.

The SPX opened higher to 1617 before pulling back to 1614. Another move higher took the index above 1618, and again was followed by a pullback, this time to 1615. The SPX then moved higher into the afternoon, reaching a new high at 1619.77. From there the SPX moved lower, dropping to 1616.68.

It appears I missed a wave for the inverted corrective wave yesterday afternoon, and the 5 Wave sequence from 1618.46 at 1612.85. The move to the new record high of 1619.77 completed another 5 Wave sequence. From the 1581.28 low, the market has now completed a sequence to 1618.46, a sequence to 1581.28, and a sequence to 1619.77. Since I was looking for Waves 3, 4, and 5 from 1074.77, we may have seen the completion of that wave today. It has been very difficult to call a top in this market, but I can now set some parameters to watch. If the SPX moves below 1612.85, I would say a 5 Wave sequence from 1074.77 has completed, and we are likely to see a correction. If the SPX moves above 1619.77, it is possible to then complete a 5 Wave sequence from the 1581.28 low, which would most likely mean the end of Wave 3 from 1074.77. A small pullback would then be expected, followed by one more move higher.

Thank you.