Thursday's Market 08/08/2013

It was an encouraging opening for the bulls this morning, as the SPX gapped higher, and quickly surpassed the 1700 level once again, settling at 1700.18. That bullish spirit did not last long however, as the index sold off sharply, dropping into negative territory, and falling to 1688.38. The bulls took control again at that point, moving the SPX back near the day’s high to 1699.75. After a small pullback, the index moved back above 1700 for the second time, hit 1700.14, and then turned choppy as it moved lower into the close.

This morning’s move higher seems to have completed a 5 wave sequence from yesterday’s 1684.91 low. After a corrective sequence lower to 1688.38, the SPX completed another sequence to 1699.75, which was followed by a semi-inverted corrective wave that completed at 1697.50. If this count is correct, I would expect the SPX to move higher from this point.

My target for the current move remains at 1776. It is still best to be cautious at this stage. If the SPX can clear 1709, the probabilities of reaching that target increase. If the index moves below 1685, I am looking for support at 1676. Resistance is at 1710, and then 1736.

Thursday Count Update 08/08/2013

I apologize for not having been able to update for the past several days, but while I have the chance, I thought it a good time to update my counts.

Looking at the hourly chart, I had a 5 wave sequence completed at 1626.61, and then a corrective sequence to 1604.57. I then counted a sequence to 1684.51 as essentially the same degree as the first two. It now appears that sequence was two degrees lower than I thought. That high was followed by an inverted corrective wave that ended at 1676.03. Up to that point the waves had been fairly easy to follow, but after that the waves became quite difficult to track. The pullback of the last several days seems to have clarified those waves. The waves became quite choppy, but the first two moves higher can be counted as completing a sequence from the 1604.57. That can be counted as a Wave 1, which was followed by Waves 2 and 3. Wave 4 was then another inverted corrective wave, and finally Wave 5 to 1709.24. This is a bit clearer on the 15 minute chart.

Yesterday the SPX completed a 5 wave sequence to the downside at 1684.91. The action today seems to confirm that.

My target of 1776 has not changed up to this point. It still seems like the most probable course of action for the market. With the move from 1604.57 to 1709.24 being one sequence, there is a chance of a further correction, so I will remain cautious, until the SPX moves above 1709.24.

Monday's Market 08/05/2013

Last Wednesday I said that it appeared that an inverted corrective wave had completed at 1684.94, and that it was likely that the market would move higher. Move higher it did, as the SPX gapped higher at Thursday’s open, and continued to rise until hitting 1707.85, finally clearing the 1700 level. On Friday the SPX moved lower to begin the day, dropping to 1700.68 before rebounding to reach a new all-time high at 1709.36. 

This morning the index opened lower, falling to 1703.55. Again the SPX rebounded, but today it failed to reach a new high, falling short at 1709.04. The index then dropped to 1704, and then bounced back to 1707.83 before the close.

Since the opening minutes on Thursday, when the SPX spiked above 1702, the SPX has traded in a narrow 9 point range between 1700, and 1709. The most prominent features of this range bound trading have been the 7 point drop at Friday’s open, and this morning’s 6 point drop to open the day. Since the inverted corrective wave ended at 1684.94, my count has a 5 wave sequence completing at 1707.85, another at 1700.68, a third at 1709.36, and a fourth at 1703.55. From 1703.55, the SPX has completed 3 sequences at 1709.24, 1704.32, and today’s close at 1707.24.

For the near term, it appears the SPX is forming another inverted corrective wave from 1707.85. This would complete at 1703. If 1703 holds, the SPX should rally, with 1718 being the likely target. I still see this rally eventually carrying the index to a minimum of 1776.