Friday's Market 05/31/2013

I will apologize in advance, but I am a little pressed for time tonight, so I will have to be brief. I will go into more detail over the weekend, but considering that today was the day many have been waiting for, including me, I wanted to at least touch on today’s developments.

Today was the day that the SPX finally broke through the 1635.53 low, and ostensibly clear up the muddled counts of the last week and a half. However, the break of that low seems to have created more questions than answers.

I am not counting out the possibility of this now turning into a deeper correction, one that will take the SPX into the mid-1500s. However, this market has been full of surprises, and there is no reason to believe that the market is not setting us up for another one. With this in mind, I will offer a possibility of this correction nearing an end.

I present this count on the 15 Minute chart, and it would be Wave 1 at 1672.96 from 1687.18, followed by an inverted corrective wave that ended at 1674.21. Wave 3 would have ended at 1640.05 and Wave 4 at 1661.91. This would project Wave 5 at 1619.

While the trend of the market is now to the downside, it could get interesting should we see a capitulation move on Monday. A sharp sell off at the open, followed by a strong, may mark the end of this move.

Again, I am far from calling this move over, but it is something to watch for on Monday. I will follow up with a more detailed analysis over the weekend.

Thank you. 

Thursday's Market 05/30/2013

The market continued the rally from Wednesday’s 1640 low, opening higher and continuing higher throughout most of the day. After some choppiness at the open, the SPX rose steadily until it reached 1659.27. Yesterday I gave 1659 as a first target for this move. After pulling back to 1654, the SPX moved above 1660, and then pulled back to 1656. One final move higher to 1661.91 followed, but was met with some selling pressure, as the index quickly fell to 1654. The 1661.91 high was slightly below my 1665 target.

My count has the 1657.29 as the completion of a 5 wave sequence from yesterday’s 1647.69 low. This is what I thought would be Wave 4 from 1640.05. This was followed by a sequence down to 1654.27, which should have been Wave 4, and a sequence higher to 1661.91. This should have completed Wave 5, and a sequence from the 1640.05 low. However, when I put this series together, 1640.05-1648.38-1647.63-1657.29-1654.27-1661.91, it does not meet the threshold for a completion of that sequence. That would indicate that this move higher has further to go. If the SPX gets above 1662, the count I am looking at would indicate a move near 1700 is underway. This would project to the same area as a possible 5 Wave sequence from 1635.53.

Until the SPX moves above 1662, it is still possible that the market is still in a correction from the 1687 high. Any move below 1635 would mean a further decline is likely.

Thank you.

Wednesday's Market 05/29/2013

Not very long ago the market was going straight up, with barely a correction. It has now seemed to turn into a market that makes large moves in opposite directions from day to day. The medium term direction of the market is still unclear, with either a rise above 1700, or a steeper correction into the mid-1500’s the next likely move.

The day started with a gap down to 1646, quite the opposite of what I was expecting. After a rebound to 1653, the SPX continued lower to 1640.05. A rally was next, as the index rose to 1648, pulled back to 1642, and then rallied to 1654. The SPX then moved lower into the close, dropping to 1647.69 with only a small 4 point bounce along the way.

Going back to the 1687.18 high, the SPX completed a sequence lower at 1635.53. The index then completed sequences higher at 1655.50, lower at 1636.88, and higher once again at 1674.19. Now the SPX has completed a sequence lower at 1640.05. This series of sequences can be seen as the completion of Wave 4 at 1635.53, followed by Waves 1, 2, 3, and 4 at 1635.53-1655.50-1636.88-1674.19-1640.05. This would project a Wave 5 high of 1702-1710.

This series can also be counted as a Wave 1 down to 1635.53, and 3 waves of an inverted corrective wave at 1635.53-1655.50-1636.88-1674.19. Today’s move lower would have completed the first wave of a 5 wave sequence that would eventually become the 4^th wave of that inverted corrective wave. This would indicate a move into the 1500’s. Like everyone else, I am waiting for a break of 1635.53 to indicate a move lower.

On a shorter time scale, we can look at the move off today’s 1640.05 low. It appears that the SPX completed Wave 1 at 1648.38, and was followed by an inverted corrective wave 2 that terminated at 1647.69. This would imply that the market should at least open higher tomorrow. The first target for this wave would be 1659, and the 1665. 1665 would also be the first resistance level set up by the 1674.19-1640.05 decline.

Although the medium term picture is ambiguous, short term I would look for a move to 1659, a small pullback, and a move to 1665.

Thank you.