Weekend Outlook 07/07/2013

On Friday, the market continued the rally off Wednesday’s 1604.75 low. An opening gap up led to a 1627.01 high, and after a slight pullback, the SPX edged slightly higher to 1627.06. After that, the index suffered a pullback, dropping to 1614.71. After that the trading was mostly higher, if not a little choppy. A rally to 1621.51 was followed by a pullback to 1617.45. This, in turn, was followed by another rally to 1626.53, a pullback to 1623.46, another rally to 1630.44, another pullback to 1623.98, and finally a rally to 1632.07.

I had been targeting 1631, and the SPX moved right into that level. I had been targeting this level as the termination point of a 5 Wave sequence from 1560.33, but it appears more likely that the actual end point for that sequence was 1626.61. After the pullback to 1604-1605, the SPX completed a sequence higher to 1627.06, and may have completed another sequence Friday at 1630.44.

The market action from the 1560 low continues to look bullish, and is most likely the beginning of a new uptrend. The next resistance levels would appear to be around 1650, and then 1675.

Thank you.

Thursday 07/04/2013

From the looks of the SPX futures, it is quite apparent that my original count was actually correct. This count, from the 1560.33 low, has the first wave of a 5 Wave sequence completing at 1589.13. An inverted corrective second wave then followed, completing at 1601.06. The third wave of this sequence completed at 1626.61, and was followed by the fourth wave which completed at 1604.57.

From the 1604.57 low, the SPX has thus far completed the first wave of a sequence at 1613.23. Wave 2 was once again an inverted corrective wave, and completed at 1614.82.

My target for the 5 Wave sequence from the 1560.33 low has been 1631, and, again, looking at the futures, it appears that target may be met.

I continue to see this as the first wave of a 5 Wave sequence that will carry the market further, and with that in mind, it is likely that the second wave of this sequence will be an inverted corrective wave. That would most likely mean a shallow pullback, followed by a continuation of this move to the upside.

Thank you.

Wednesday's Market 07/03/2013

The action of the SPX seemingly played out much as I had outlined yesterday, but looks can sometimes be deceiving. The index opened lower as expected, gapping down at the open and dropping straight to 1604.57, right at the 1605 support level. The SPX then rallied to 1610, before dropping back near the morning’s low, but holding just above it. The SPX rose again, this time to 1610.53, and then after some choppy trading rallied in earnest, moving up to 1613, and then 1618.97. From there the index started to drop, falling back to 1614.82 before rising slightly into the close.

Since I was looking for a lower open, with support at 1605, followed by a rally to 1631, today’s shortened action seemed to fit the bill. The only troublesome aspect was the drop to 1604.57 appears to have been a singular move. I had been expecting a 3-4-5 decline to 1605 to complete the sequence from 1626.61. While it is possible that the move was so swift that those last waves occurred beyond the resolution of my chart, but that is an exceedingly rare event. It is more probable that I have misread several waves, and this wave structure is slightly different than I had thought.

This thesis seems to have been confirmed by the action following today’s low. From that low, the SPX completed a 5 Wave sequence at 1613.23, and then after a small pullback, another sequence to 1618.97. From yesterday’s 1616.77 low, we then have 1615.1-1604.57-1613.23-1611.88-1618.97. This happens to complete a semi-inverted corrective wave.

1618.97 would then seem to be the fourth wave from 1626.61, with the fifth wave likely carrying below 1601. I will try to explain the changes in my count in more detail tomorrow, but for now it will suffice to say that it is most likely that 1626.61 marked the end of a 5 wave sequence from 1560.33. So far four waves of a correction from that high have completed, with the fifth wave likely to find support at 1593. At this point I would consider that the end of the corrective phase, and do not foresee a re-test of the 1560 low.

Thank you.