Wednesday's Market 06/05/2013

The market continued lower today, starting with a gap down open, and never looking back. After initially falling to 1624.50, the SPX bounced back to 1629, and then fell further to 1620.18. After another 4 point bounce, the market fell to 1615.43, which was followed by another 4 point bounce. That bounce was followed by another drop to 1609, a bounce to 1617, and then a drop to the low of the day at 1607.09. At that point the market turned choppy, trading in between that low and 1615. The SPX fell back to 1608.38 near the close.

The SPX dropped below my target level of 1616, but is now within the range for completing the sequence from the 1687.18 high. With the SPX completing a 5 Wave sequence from that high at 1608.8, and now within my target zone for the completion of this wave, I would look for the SPX to move higher from here. If the SPX moves above 1614, I would look for the index to stage a rally.

Near term support is at 1618, and the 1640. If this is the end of this wave, I would have an initial target of 1653.

It is still possible that this wave has not yet completed. Should the SPX fall below 1608, then another sequence to the downside would need to be completed. I would expect this wave to hold above 1585.

Thank you.

Tuesday's Market 06/04/2013

After moving above, and then below yesterday’s close at the open, the SPX found some legs, and moved to 1645.59, before pulling back. The pullback ended at 1642 however, and the index moved higher again to 1646.53. The bears took over from there, as the SPX quickly moved lower to 1638 before rebounding. Another leg down to 1634 followed, before another small rebound. At that point the bears really took over, driving the index down to 1623.62. The SPX then staged a meaningful rally, rising to 1636.80 before falling back to 1631.31 at the close.

Looking back to my weekend post, I was looking for a move below 1619 to indicate the completion of the wave from 1687.18. Although the SPX came close, it did not complete that wave as of yet. I would expect the move off the 1622.72 low to continue, most likely into the 1646 to 1652 range. At that point the move lower from 1687.18 should continue, with a target of 1616.

Thank you.

Weekend Outlook 06/02/2013

Coming off the long holiday weekend, the market began the week on a positive note, gapping higher at Tuesday’s open, and quickly moving to 1674.21. That would prove to be the high for the week, as the market just as quickly reversed course and headed down. Following a gap down open on Wednesday, the SPX fell below Friday’s closing level to 1640.05, and then rallied into Thursday. This rally carried to 1661.91, and then failed. After a choppy open on Friday, and a small bounce, the SPX headed further south, with the selling accelerating into the close, as the SPX closed the week at its low of 1631.67.

By falling below the previous low of 1635.53, the SPX signaled that it was still in a downtrend from the 1687.18 high. Since the wave structure from that high has not yet completed, I believe this move has further to go. The question now is whether this is the start of the move down to the 1540 level, or whether this move lower will stop short of that, and stage one more rally, possibly to one more new high.

My count from 1687.18 now shows the completion of four waves, with Wave 4 terminating at 1661.91. A move below 1618 would complete Wave 5, and set the stage for a rally off that low. While that rally may lead to new highs, it is possible that it may fall short of that level. While there is a cluster of support between 1618 and 1621, and would provide a good stopping point for this move, it could end at a lower level. I would put the lower limit of this move at 1595.

By my count, the SPX needs to put in a low, and stage one more rally to finally complete the entire move from 1343.35. At that point I would expect a deeper correction, down to the 1540 level.

Thank you.