Thursday's Market 07/11/2013

It was another gap up open for the SPX today. And today I am not just making a joke. After that gap up open, the SPX moved to 1671.00 before falling back. The index slipped to 1666.29 before resuming the rally. First, the SPX made a slightly higher high at 1671.03, and then fell back to 1668.35. After moving sideways into the early afternoon, the SPX began to rally again, and quickly moved to 1675.08. After another small pullback, the index continued to move higher into the close, topping at 1676.63.

Yesterday I said that I was looking for a move higher, giving a target of 1666, and then expected a small pullback before another move higher. The SPX did open higher, moving slightly higher than my target, but the pullback from that high stopped at 1666.

It would appear that the open to 1671.00 completed the 5^th wave from yesterday afternoon’s 1647.66 low. By my count, that was Wave 3 from 1604.57. The small pullback that followed was most likely Wave 4, with Wave 5 from 1604.57 now underway. I expect this wave to end at 1689-1690. If the SPX moves to this level, I would then expect the 20 point or so correction I spoke of yesterday.

On a cautionary note, the sequence from 1647.66 to 1671.00 contained no complex corrective wave. Often this results in a secondary sequence forming, and such a sequence may have topped this afternoon at 1676.63. If the SPX falls below 1672.77, this would be the most likely scenario. I would expect support to be at 1670, and then 1661.

I am looking for the SPX to move to 1689-1690. Support should be at 1670, and then 1661.

Thank you.

Wednesday's Market 07/10/2013

It was another gap up open…….wait……there WAS NOT a gap up open. That is news in itself for this market. Although the SPX did not gap up, it did open to the upside once again. After hitting 1653.67, the index headed down, dropping to 1648.17. From there the SPX moved slightly higher, chopping its way to 1651.48. After a slight dip, the SPX headed sharply higher, reaching 1657.92. Almost as quickly the SPX dropped, taking out the previous daily low, and falling to 1647.66. A move to 1653.50 followed, and then a pull back to 1650.38 before rising into the close.

After yesterday, I was looking for one more move higher, to 1666, before a pull back. It now looks like I was slightly off. From the 1604.57 low, I had Wave 1 to 1627.06, followed by an inverted corrective wave that completed at 1637.01. I then had the move to 1654.18 as Wave 3. It now appears that only the first 3 waves of that inverted corrective wave completed. The third wave of that sequence ended at 1614.71. The entire move from that low to today’s 1657.92 high completed the fourth wave, with the subsequent drop to 1647.66 finally completing the sequence.

From here I am looking for the SPX to move higher, with the first move having the same target I gave yesterday, which was 1666. After that there should be a small pullback, and then one final move higher before a slightly larger pull back, most likely somewhere around 20 points.

The first wave of this sequence was just over 22 points, 1604.57 to 1627.06. The third wave, 1647.66 to 1666, would be around 20 points. Therefore, after the SPX hits 1666, and pulls back, I would expect Wave 5 to be of that same magnitude.  

Thank you.

Tuesday's Market 07/09/2013

The SPX gapped up at the open today, quickly finding itself at the 1650 resistance level I mentioned yesterday. The index made it to 1649.90 before pulling back to 1643.93. After that low, the SPX spent the rest of the day moving progressively higher, interrupted by only very small pullbacks along the way. By the afternoon, the SPX had reached 1653.49, and by the end of the day 1654.18.

In yesterday’s post I indicated that two waves had now completed from 1604.57 low and possibly four waves of lesser degree by the end of yesterday. The extended move today from yesterday’s 1638.06 low completed a 5 wave sequence at 1653.49, and then a higher degree sequence at 1654.18. This most likely completes the third wave from the 1604.57 low.

The slight pull back at the end of the day may have completed the fourth wave, which would give a 5^th Wave target of 1666. At that point we could see a pullback similar to the 22 point move we saw from 1626.61 to 1604.57. As I mentioned yesterday, I still expect this market to move higher from that point.

Thank you.