Thursday's Market 06/13/2013

You always have to love when the market throws you a curveball. After the dramatic decline yesterday, and everyone anticipating a further decline, the SPX opened slightly lower, and then headed virtually straight up.

After opening lower to 1608, the index headed higher after that, moving up to 1617 before pulling back. The next stop was 1619, and after a small pullback, 1625. Another small pullback followed, and then the SPX headed to 1639.25, with barely a pullback along the way. The index then dipped to 1635.87 shortly before the close.

The move down to 1608.07 completed a 5 Wave sequence from 1647.72, denoted by the blue “C” on the 5 minute chart, which I currently see as Wave D of 2. Because of the configuration of Waves A, B, and C, it allowed Wave E to be rather powerful, which indeed it was. This move still fits within my model’s parameters for a move lower to 1561. Wave 1 down completed at 1639.26, with today’s move higher possibly completing an inverted corrective Wave 2 from that point. Waves 3, 4, and 5 should then carry us down to the 1561 level.

Support would be at 1619, and then 1611. Should the next wave complete at 1619, there would most likely be a very small bounce before a drop to 1561. If Wave 3 moves to 1611, I would then expect a rebound to near 1623 before the move to 1561.

Although my current count would allow for a move to slightly higher levels, a move above 1648.69 would put my count in serious jeopardy, and a move above 1674.21 would mean that my current count is wrong. Given those facts it is prudent to explore the alternative at this point.

My current count calls for a move down near 1561, followed by a move higher. I would anticipate this move to fall short of the previous 1687.18 high, and be followed by another move lower, most likely carrying the market to new lows.

My alternate count would be that 1598.23 was the low of this move, and would be followed by a move to substantially higher levels. My minimum target for this count would be 1800. If the SPX moved above 1648.69, I would start considering this count, and if the index moved above 1674.21, this would most likely become my preferred count.

At the moment I still consider a move to 1561 the most likely, with support at 1619, and then 1611.

Thank you.

Tuesday's Market 06/11/2013

In Friday’s post I indicated my opinion was that the 1644.40 late afternoon high would be the extent of the move from 1598.23. The SPX did go on to make a slightly higher high at Monday’s open, rising to 1648.69 at the open, but it has been downhill ever since.

The SPX gapped down this morning, dropping to 1622.92, before starting to rally. That rally to reach yesterday’s close, stopping at 1640.13. From there the SPX stair stepped lower, until it reached 1636. After a small rebound, the selling accelerated, dropping the index back to 1626.99. After a seven point rally, the SPX fell again, this time falling to 1625.68 just before the close.

The wave action from the 1648.69 high has been fairly complex, but does not look like it has completed a 5 Wave sequence from that high. First support appears to be at 1617, followed by 1602. This entire sequence from 1648.69 should complete near 1561.

Thank you. 

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.