Monday's Market 06/17/2013

It was another gap opening for the SPX, this time to the upside. This carried the index to 1642 shortly after the open, with the SPX then continuing higher in choppy trading until it hit 1646.50. An extended pullback ensued, carrying the SPX back to that 1642 level. After hitting 1642, the index headed higher once again, with the SPX making it back to 1645.32. The index started to pull back again, with that pullback quickly becoming a sell-off. The SPX dropped all the way back to 1630.34, almost erasing the gains for the day, before heading higher. A rally into the close followed bringing the SPX 1641 before it faded into the close.

The market continued it’s up and down antics, seemingly unable to embark on a sustained trend in either direction for the moment. It would appear that the SPX completed a 5 Wave sequence from Friday’s 1623.96 low today at 1645.32 and followed that with a sequence to the downside that completed at 1630.34.

Although the day to day movements of the market have been treacherous to forecast, I still believe the markets have at least one more move to the downside before it can move higher.

I will keep my downside target at 1561 for the moment, however, there are several ways this can play out, and so that target may change. I would remain short term bearish unless the SPX can rise above 1674.21.

I will be away for the next several days, with limited access to the markets. I will try to update when I can.

Thank you for your continued support.

Friday's Market 06/14/2013

The SPX opened lower today, falling to 1633.74 before trying to rally. The index rose to 1640.80 fairly quickly, but at that point the rally stalled. The SPX began to fall again, moving down to 1628.63 with barely a bounce. The index then traded in a choppy range, before once again moving lower, dropping to 1623.96. The SPX then rallied to 1631, dipped to 1626, then rallied again to 1632. After that the index slipped to 1625.13, before rising slightly into the close.

After the opening dip, the market rallied to 1640.80. This completed the move from yesterday’s 1608.07 low, moving slightly above yesterday’s high. I had mentioned that it was possible to move slightly higher, and this move still fits within the scenario I outlined yesterday. The drop to 1628.63 then completed a 5 Wave sequence from that high, which was followed by an inverted corrective wave to 1628.56. The move to 1623.96 then completed a higher degree sequence from 1640.80.

From there, it appears that the SPX moved higher in three waves, 1623.96-1630.51-1626.11-1631.55, which seemingly is the start of an inverted corrective wave. The SPX then completed a sequence to the downside, which finished slightly above the 1623.96 low.

It is still most likely that the SPX is in the third wave of a 5 Wave sequence that will complete near 1561. Support is at 1619, and then 1611. A move above 1648.69 would put this count in jeopardy, and a move above 1674.21 would invalidate it.

Thank you.

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.