Thursday's Market 06/27/2013

It was another day, another gap up open for the market. The SPX gapped higher, and then reached 1614 before a very slight pause. After that pause, the index headed higher, hitting 1618, pulling back to 1614, and then hitting the high of the day at 1620.07. From that point the SPX pulled back, dropping to 1612, and then moving back up to 1618. After dropping to 1613, the SPX traded between that level and 1617 into the close.

Ideally I had been looking for a move lower to 1597, followed by a move higher to 1607. This would have completed Wave B of 2 from the 1560.33 low. The SPX did complete that Wave B of 2 today, but did so by rocketing straight up to 1620.07. At that point the index did see the pullback for Wave C of 2. Waves C, D, and E of these inverted corrective waves can manifest themselves as either a zig-zag pattern, or as a pattern in which Wave D surpasses Wave B, and Wave E completes without moving beyond the level of Wave C. Usually after such a strong run-up, the three waves are more apt to complete as a zig-zag, which would result in a more sustained pullback. After the SPX dropped to 1611.94, moved higher to 1618.38, and then started to move lower once again, it seemed like this pattern was underway. However, with the last pullback remaining above the Wave C low of 1611.94, both patterns are still viable. If these waves do complete as a zig-zag, Wave E should complete between 1611, and 1608. If it does not, Wave D should rise above 1620, and then be followed by a pullback of 8-10 points. Either way, I still see the market moving higher before completing a 5 Wave sequence from the 1560.33 low, and should complete around 1631.

Should this play out as anticipated, this should merely complete the first wave of a sequence that may eventually move above 1776.

 At the moment a move below 1608 would put this count in jeopardy, while a move below 1588 could mean an end to this rally.

Thank you.

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.