Thursday's Market 07/25/2013

The SPX moved lower this morning, continuing the pull back from yesterday’s 1698.38 high. The index fell to 1690.31 before rebounding, a rebound that took the SPX into positive territory at 1687.05. That in turn led to another move lower, which found the index eclipsing the previous low by a fraction, stopping at 1680.07. The SPX moved steadily higher from there, rising to 1689.42 before pulling back to 1685.04. From there the index again moved higher, making it to 1690.94 before fading into the close.

As I indicated yesterday, the SPX was in the process of forming an inverted corrective wave 2 after the wave 1 drop to 1687.56. This corrective wave did end yesterday at 1686.43, with waves 3, 4, and 5 completing this morning at 1680.31. This turned out to be only wave 1 of a higher degree wave, with wave 2 carrying to 1687.05, followed by waves 3, 4, and 5 completing just below the previous low, at 1680.07. From there the SPX appears to have completed a 5 wave sequence higher at 1689.42. After a small pull back, the index completed another 5 waves at 1690.94.

The SPX seems to have completed a wave 1 at 1689.42. The pull back appears to have occurred in three waves, and with another 5 wave sequence completing above the 1689.42 high, it is likely that the index has not yet completed the current move higher. If the SPX move above 1698.38, the probabilities for a continuation of the uptrend will increase. At this point it looks like my 1718 is still in play on the upside.

If the SPX moves below 1680.07, the most likely stopping point would be 18-20 points below the high from 1680.07, which is currently 1690.94. This would give a target between 1671 and 1673. Otherwise support is still at 1680, and then 1655.

Wednesday's Market 07/24/2013

The market gave it a valiant try, but fell just short of managing a new all-time high. After the sell-off into yesterday’s close, the SPX gapped up again at the open, reaching 1698.38, less than a half point from the previous all time high. The index was quickly turned away from those lofty levels, as the SPX sold off rapidly, dropping into negative territory, and hitting 1687.56 before attempting to rally. The rally would not last long; as after rising to 1691.67, the SPX began to fall again, this time moving down to 1682.57. Following that, the index bounced around in a narrow four point range for the rest of the day.

Yesterday I noted that 1696.26 completed a 5 Wave sequence from 1671.84. With the drop yesterday afternoon, followed by the move above that 1671.84 high, the index completed a sequence from the 1604.57 low. This can be counted as 1604.57-1684.51-1671.84-1696.26-1691.52-1698.38. This most likely is the third wave from the 1560.33 low. There are still several ways in which this wave can complete, but my minimum target of 1776 remains intact.

From today’s 1698.38 high, the SPX fell to 1687.56 for wave 1 of this pullback. The small rally unfolded in three waves to 1691.67, and is most likely part of an inverted corrective wave 2. The drop to 1682.57 and small bounce from there may have completed this wave 2. The appearance of in inverted corrective wave indicates that there is still more downside to come before this pullback completes.

There is considerable support within a couple of points either side of 1680, and then 1655 after that.

Tuesday's Market 07/23/2013

It was another record setting day for Wall Street, as the SPX reached another all-time high of 1698.78. The market gapped up at the open again today, and hit that record within the first few minutes of trading. After that it was what for this market qualifies as a steep decline, as the SPX dropped to 1691.13 after the first hour and a half. The market tried to rally after that, rising through most of the afternoon, with the index climbing back to 1696.26. The SPX then sold off during the last hour, dropping to 1691.52 before rising into the close.

Looking at the waves from yesterday’s 1697.61 high, I count a 5 wave sequence down to 1693.01, a sequence up to 1698.78, followed by 3 waves down at 1694.05-1695.58-1691.13. This completed a semi-inverted corrective wave from the 1697.61 high, which was a little unexpected. From 1691.13, the SPX completed what appear to be 3 waves higher, before the late afternoon sell-off.

The appearance of the semi-inverted corrective wave, followed by what appear to be only 3 waves higher, leads me to believe that 1696.26 is the completion of a wave from 1671.84. This could be Wave D of an inverted corrective wave from 1626.61. If this is true, I would expect a pullback to around 1684. This could also be a smaller degree wave 1 from 1671.84. This will be determined by whether or not the SPX moves lower from here.