Wednesday's Market 06/26/2013

Today’s market action was a virtual carbon copy of yesterday. A gap open to start, followed by a sharp pullback, a steady rise into the close, and a mild pullback at the close.

Today’s gap open took the SPX to 1603.58, and was followed by a pullback to 1594.94. From there the index rose steadily through the rest of the morning and into the late afternoon hours carrying the SPX to 1606.83. The index then fell back to 1603 before the close.

As I mentioned yesterday, the SPX had not yet completed a 5 Wave sequence higher off the 1560.33 low. That was evident this morning as the SPX gapped above yesterday’s high. This appears to be part of an inverted corrective wave from yesterday’s 1593.79 high. This corrective wave then completed at 1594.94. The steady rise into the afternoon then completed a 5 Wave sequence from that low, and a third wave from 1583.06.

The SPX seems to be in a nested wave structure, with a Wave 1 at 1589.13, a Wave A of an inverted corrective wave at 1583.06, and now 3 sequences of Wave B completed at 1606.83. Ideally, a move down to 1597, followed by a rise to 1607.70 would complete Wave B. At that point the SPX should undergo a more sustained pullback.

Thank you.

Tuesday's Market 06/25/2013

The SPX continued to rally off the 1560.33 low, gapping up this morning, and rising above 1588 in early trading. A steep sell-off from that point nearly closed the opening gap, but the buyers soon returned, and the index moved higher again, this time reaching 1589. Another dip took the SPX to 1583 before rallying again to 1593.79. The SPX then started to fall again into the close.

From Monday’s 1560 low, the SPX rallied to 1586.45, completing a 5 Wave sequence. That then became Wave 1 of a larger degree sequence which ended today at 1589.13. After moving lower in a 5 Wave sequence to 1583.06, the index then rose to 1593.79, in another sequence. It appears that the SPX has now completed 3 5 Wave sequences from the 1560 low, 1589.13-1583.06-1593.79. Given my current interpretation of 1560.33 as the low of the correction from 1687, this would mean that the SPX should continue higher. I am still looking for a move above 1598 to confirm this scenario.

The alternative is that the 3 sequences to the upside are part of a complex corrective sequence from the 1560 low. A move below 1560 would indicate that this interpretation is the correct one.

Thank you.

Monday's Market 06/24/2013

Well, it certainly looks like I missed all the excitement. Luckily, the fish in Minnesota were a bit easier to figure out than this market has been lately.

After declining to 1577.70 on Friday, and then rallying into the afternoon to 1598.31, there was hope that the correction might be over. Those hopes were dashed this morning as the SPX gapped lower, and quickly dropped to 1560.51. After a short rebound, the index fell to 1560.33 by mid-day. That was followed by an impressive rally to 1586.45, a 26 point rally, after which the SPX declined was again into the close.

Looking at the entire decline from this point, it appears that the SPX completed a 5 Wave sequence down, which may signal the end of this decline. It would now appear that 1687.18 should be treated as the high. From there, the decline to 1635.53 would be Wave 1 of the decline. The SPX then completed an inverted corrective Wave 2 at 1654.19. This sequence went 1635.53-1674.21-1598.23-1648.69-1608.07-1654.19. The three waves to the upside were 37, 50, and 46 points. The 37 point rally started from the highest point, and the 50 point rally from the lowest. Ranked by starting points, the rallies were, 37, 46, and 50 points. This proportionality is the basis of my model.

From the Wave 2 high, Waves 3, 4, and 5 completed as 1608.34-1614.02-1577.70. This completed a 5 Wave sequence from the 1687.18 high. This then became Wave 1 of a higher degree wave which completed today at 1560.33. I have been mentioning my target of 1561 for some time, and this target seems to have turned out to be quite accurate.

There is still a chance that this market may make another slightly lower low, and would look for the SPX to move above 1598.31 to confirm this as the low. I will wait to get that confirmation before looking ahead to the next move.

Thank you for your continued support.