Thursday's Market 05/23/2013

As strange as it sounds, the SPX did NOT make an all-time high today.  

The SPX gapped lower this morning, and within minutes the index had fallen to 1635.53. From there the SPX bounced to 1647, and after a small pullback, continued higher to 1654. The index then fell back to 1645, before heading higher to 1655.50, thus closing the opening gap. After that the SPX drifted lower into the close, dropping to 1648.82.

In yesterday’s post I indicated the market may move lower, giving a target of 1641. This would have completed a 5 wave sequence from the 1687.18 high as 1687.18-1672.96-1660.80-1648.86-1655.43-1641. Today’s lower opening exceeded the lower limit for this count, which most likely means that today’s 1635.53 low only completed wave 3 of the sequence. This was confirmed as the move from 1660.80 completed a 5 wave sequence at that low. This was followed by a 5 wave sequence higher to 1655.50, which should be wave 4 of the sequence. If this count is correct, wave 5 of this sequence should complete between 1632 and 1623. This should in turn complete Wave 4 from 1074.77, and set the stage for one more move to new highs before a larger correction develops.

So, for the short term, I am expecting a move lower to 1632-1623, followed by a move to new highs. If the SPX moves above 1661 from this point, I would expect the market to continue higher to new high territory.

Thank you.

Wednesday's Market 05/22/2013

It was an interesting day for the markets, to say the least. A sharp rise to another all-time high, followed by the biggest decline we have seen in over a month.

The SPX opened higher, rose to 1684, and after a minor pullback, hit 1687.18. But it was all downhill after that. The SPX dropped to 1673, tried to rally, but after hitting 1683 started a steady decline that dropped the index to 1648.86. The SPX then rose to 1655 into the close.

As I mentioned yesterday, I expected a move above 1677 to lead to higher prices. It did, as the SPX rose to 1687, although you had to be quick to catch that move. At 1687 the SPX completed a 5 wave sequence from 1662.67, and has finally completed a sequence from 1581.28. This completes Wave 3 from 1074.77. A pullback had been expected once Wave 3 ended, and it looks like we saw the majority of it today. At this point it appears that only 3, and possibly 4, waves of this corrective sequence have completed. I expect to see another move down, with a target of 1641. I would then expect one more move to new highs before a more substantial correction occurs.

Thank you.

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.