Tuesday's Market 05/21/2013

I thought that yesterday afternoon’s 1663.52 low completed an inverted corrective wave from 1661.49. As it turns out that was Wave 1 of E from that high.

The SPX did move higher at the open, but managed only to get to 1672 before turning lower. The index moved below 1663.52, falling to 1662.67 before reversing course once again. The SPX moved steadily higher until it hit another, you guessed it, all-time high at 1674.07. After a minor pullback the SPX moved higher again, surpassing 1674.07, and rising to 1674.93. From there we saw another pullback, this time taking the SPX to 1668.70 near the close.

As I mentioned above, yesterday’s 1663.52 low completed only Wave 1 of E. This morning’s rise was Wave 2 and the decline from that high resulted in Waves 3, 4, and 5 completing. This did complete the inverted corrective wave, and from there the SPX moved higher. The SPX completed a sequence at 1674.93, and then what appears to be a corrective sequence to 1668.70.

The current market set-up is quite interesting. My expectation has been that the SPX should complete a 5 wave sequence from 1581.28, which would be followed by a small correction, and then another 5 wave sequence higher to complete the sequence from 1074.77. The market has continued to complete sequences, and then go on to form larger degree sequences while moving higher. The first of these sequences completed at 1635.01, the second at 1661.49, and now the SPX has started forming another sequence. Waves 1 and 2 of the current sequence have completed, with Wave 2 being the recently completed inverted corrective wave. It is possible that today’s rise to 1674.93, and decline to 1668.70 were Waves 3, and 4. If this is correct, Wave 5 of this sequence should complete between 1675 and 1677. This would appear as a diagonal triangle. I would then look for a move below 1668 to confirm this scenario.  This would then be the start of the corrective sequence lower.

If the SPX moves above 1677, it would be most likely that today’s rise to 1674.93 was simply wave 1 of 3. This would indicate a further move higher before a correction.

Thank you.

Monday's Market 05/20/2013

Hard to believe. Another all-time high for the SPX. At times it seems like this will never end, but we all know it will. Sometime. If today was not the start of a small pullback, it should be coming soon.

After another gap open, the SPX hit 1658.31 before pulling back. The SPX then moved higher to 1660.74 before another minute pullback. From there the market moved steadily higher, hitting 1672.84. That was followed by a somewhat larger pullback to 1663.52. This 9 point pullback was similar in magnitude to the 11, and 12 point pullbacks we saw last Wednesday and Thursday.

The rise from Friday’s 1648.60 low to 1672.84 completed in a 5 wave sequence. The drop to 1663.52 would then seem to complete an inverted corrective wave from Wednesday’s 1661.49 high. We should now see one more move higher to complete the sequence from 1581.28.

To review, 1581.28 was the termination point for Wave 2 from 1074.77. Once the SPX completes a 5 wave sequence it will complete Wave 3. At that that point I would expect a correction, followed by another move higher to complete Wave 5. That is the point at which I would expect a more substantial correction.

So far, from 1581.28, the SPX completed 5 waves to 1635.01, and then a higher degree sequence at 1661.49. The three aforementioned pullbacks formed the inverted corrective Wave 2, and should be followed by waves 3, 4, and 5 higher. Because of the structure, it would be possible to complete this sequence without making a new high.

If the SPX moves to 1668, and then falls below 1663.52, I would expect a pullback has begun. Should the SPX move above that level, 1677-1681 could be the next stop.

Thank you.

Friday's Market 05/10/2013

Although the SPX tried mightily towards the close, it failed to reach a new time for the first time in what seems a month. The mettle of both the Bulls, and the Bars was tested today, as the market first looked like it was going to break lower, then looked like it was going to move into new high ground, but in the end did neither. It was a very interesting wave structure today; one we have seen before.

The market worked its way higher this morning, coming off yesterday’s decline. The SPX first hit 1630, pulled back to 1626, and then continued higher to 1632. From there the market sold off, dropping to 1625. A rally to 1630 followed, but that was met by more selling pressure, and the SPX fell back below 1624. A choppy uptrend followed, as the SPX worked up to 1630.28, just above the initial rally this morning to 1630.17. After a very minor pullback, the SPX rose sharply to the high of the day at 1633.47.

Those who have followed me have heard me talk about a semi-inverted corrective wave in the past, and I believe that is exactly what we saw today. Off of a low, this structure would have a move up for wave 1, and a pullback for wave a of 2 Wave b of 2 then exceeds the wave 1 high, with waves c, d, and e of 2 forming a zig-zag pattern that terminates below wave a of 2. Wave 3 then generally ends just above wave 1, with wave 4 being a small pullback. Wave 5 is then usually a sharp move higher. Looking at the wave structure from yesterday’s 1623 low, that is exactly what we had today. If you go back and look at the wave from 1357.38 following the 1422.38 high, you will see the same structure. That is not to say the eventual outcome will be the same. I do see 1635.01 as the completion of a 5 wave sequence from 1074.77, with my first support level at 1599.

Thank you.