Tuesday's Market 09/17/2013

Having completed a semi-inverted corrective wave from Monday’s explosive opening late yesterday afternoon, the SPX was poised to move higher this morning, and it did. Today’s open was more muted than yesterday’s, but the index moved steadily higher, moving up to 1704. After a small pullback the SPX advanced again, this time to 1705.24. Another pullback was followed by a third move higher, with the index reaching the high of the day at 1705.52. This completed a 5 wave sequence from yesterday’s late afternoon low. After that the index completed three waves down at 1704.03-1705.33-1703.63 before moving higher into the close.

It now appears like the semi-inverted corrective wave that completed yesterday was but the first wave of an inverted corrective wave that completed this afternoon at 1703.63. Interestingly, this is the same structure that started this entire rally from 1627. By my count, the SPX has now completed wave 2 of 5 from that 1627 low. It would appear that the index is in the final stages of this wave. My target remains at 1745, but that is my optimal target. The minimum target, given my interpretation of the wave structure, would be 1713. A fairly wide range to be sure, but that is usually the case with a wave structure such as this, with the impulse waves increasing in length. Sometimes the smaller degree waves can narrow the range, but with only two waves of wave 5 completed, that is not the case at the moment.

I have been looking for this wave to end near 1745, and then be followed by a move lower to around 1680. As I said, the exact end of the current wave is difficult to pinpoint, but this has been a rather extended advance, and the risks of a pullback are growing. It is important to note that the 1680 number should not be taken as a target, but as a guideline at the moment. It is just as likely to see a shorter pullback, and then a continuation of the advance into the 17733-1776 area. I am content to see how this plays out over the next couple of days, or through the completion of this wave.

I am looking for the current wave from 1627 to complete above 1713, with an optimum target of 1745. Support remains at 1685, 1669, and then 1661.

Monday's Market 09/16/2013

It was another gap up open for the SPX, as the index moved above 1700 for the first time since early August. After moving up to 1703.74 after the open, the SPX pulled back to 1698.77, and then made one more push higher to 1704.95. After that the index moved steadily lower, dropping to 1695.15 before moving a bit higher into the close.

It still appears that the SPX is in a wave 5 from the 1627 low, with a target of 1745. I see wave 4 having completed last Thursday at 1681.96. From that point, it looks like the index completed a sequence this morning at 1703.74, and then formed a complex corrective wave into the afternoon low of 1695.15. This looks to be waves 1, and 2 of this 5^th wave.

Support remains at 1685, 1669, and then 1651.

Weekend Outlook 09/14/2013

Last Friday, with the SPX at 1655, I targeted the 1680-1687 range as a possible battleground for the bulls and the bears. On Tuesday morning the index moved above 1680, and the remainder of the week was spent between 1678.29, and 1689.97. On Wednesday the SPX moved above 1687.18, the upper limit for my semi-inverted corrective wave scenario that would have targeted a move lower to below 1560. This means that it is most likely that the index will continue higher, likely taking out the 1709 all-time high.

This has been a trying week for bulls and bears alike, and it seems only fitting that the market should head into the weekend without a clear resolution. I am still looking for the market to move higher, but I would feel more confident if the SPX could clear this 1685 support zone with some authority. Nevertheless, the SPX has moved above what I consider a critical level, 1687, and the wave structure still supports a move higher.

From the 1627.47 low, the SPX completed a 5 wave sequence to 1641.18. From that point, it formed a semi-inverted corrective wave that terminated at 1628.05. It was at this point that I indicated the index was poised to make an extremely powerful move to the upside. This semi-inverted corrective wave turned out to be but the first wave of an extended inverted corrective wave that eventually completed at 1640.62. So from 1627.47 the SPX has completed a wave 1 at 1641.18, and a wave 2 at 1640.62. The next move higher was to 1664.83, and looks to be wave 3 from 1627. This was followed by another inverted corrective wave that completed wave 4 at 1681.96. This gives an optimal target of 1639 for wave 5, very close to my original 1645 target.

When the SPX moved off its 1560.33 low in late June, I set a target of 1776. This target came into question as the index pulled back off the 1709 high, and eventually found its way to 1627. In my post on 9/4/13, http://5wavemodel.blogspot.com/2013/09/wednesdays-market-09042013.html, I outlined a scenario where the SPX could still reach that target. This entails the index forming 5 waves from the 1560 low that would complete a sequence from 1074.77 at 1773. These waves would go something like 1709.24-1627.47-1745-1680-1773. Given the discussion above, this seems to be a likely scenario. This would not complete a sequence from the 666.79 low, so there should be at least one more move to the upside after that.

For the week ahead, I am looking for a continuation of the move higher from 1627, with a target of 1745. My current wave count requires the SPX do hold above 1682. A break of that level at this point and the index could correct further, with support at 1669, 1651, and then 1621.