Friday's Market 06/07/2013

It was one of those days for the market. The SPX gapped up to 1632 at the open, and after a five point pullback, moved virtually straight up to 1642.63. For the next few hours the market meandered lower, dropping first to 1636, and then to 1632.98 after a small bounce. Just as it looked like the market was ready to roll over, the bulls roared back, taking the index to a new high for the day at 1644.40.

In yesterday’s post I gave my count from the 1598.23 low as Wave 1 up to 1617.29, followed by an inverted corrective Wave 2. This indicated a further move to the upside, and I gave 1645 as a target. Working from that count, the gap up open to 1632.41 was Wave 3. Usually, if a wave 2 is a complex wave, such as an inverted corrective wave, wave 4 is a simple wave. Today was an exception, as Wave 4 appears to have been another inverted corrective wave that terminated at 1632.98. This was followed by a well defined 5 wave structure to 1644.40, completing the 5 Wave sequence from the 1598.23 low. The 1644.40 high was just shy of my 1645 target.

The double complex was interesting, as it seems the same structure occurred leading into the 1687.18 high.

Today’s high should be the end of the current move, and should also mark the end of a larger wave structure. I have an upper limit of around 1661 for this move, so it is possible that the SPX will move slightly higher. As I mentioned, I believe today’s high marks the end of a larger structure, and the market should now be ready to correct. I would have an initial target of 1593, and a secondary target of 1548. This wave does, however, have quite a large possible range, and so may be a surprise waiting to happen. It will certainly bear watching. At the moment, 1661 seems to be the critical level. Any move above that may signal a move quite a bit higher.

Thank you.

Thursday's Market 06/06/2013

The SPX moved lower at the open, falling to 1605.19, before rallying to 1614.64. This rally fell just short of the 1614.95 high I was looking for the index to surpass to initiate a further rally. After being turned back from that level, the SPX dropped to 1607, rallied back to 1614, then fell to 1598.23. At that point the SPX did stage a rally. It moved steadily higher, in a choppy uptrend, until it hit 1614.45, again, just shy of the critical 1614.95 level. After a small pullback the SPX finally broke through that level, rising to 1617.29. A small pullback followed, and the SPX moved to the high of the day at 1622.24.

The move to 1598.23 completes now completes a 5 wave sequence for this move lower. This is best counted from the 1674.21 high, as the SPX formed the sequence 1674.21-1640.05-1661.91-1622.72-1646.53-1598.23. This gives a model value of .9988.

From the 1598.23 low, the SPX has been forming a more complex sequence. Waves 1, 2, 3, and 4 of a sequence formed at 1598.23-1603.76-1599.41-1607.86-1603.56. Wave 5 of this sequence included a double extension, as Wave 1 of 5 broke down as 1603.56-1607.99-1606.52-1610.44-1606.82-1610.94. The rest of Wave 5 completed as 1606.82-1610.94-1608.86-1614.45-1611.89-1617.29. From there, it appears an inverted corrective wave is forming, which indicates that the SPX should move higher.

This move from the 1598.23 low should end near 1645. At that point the market should once again move lower.

Thank you. 

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.