Friday's Market 11/01/2013

The decline from Wednesday’s 1775.22 all time high has been extremely interesting, and which may lead to some longer term implications.

The decline started with a fairly straight forward sequence which went 1770.67-1773.30-1764.31-1770.48-1757.24. From that point, the SPX made a choppy advance to 1768.53. The sequence 1766.33-1755.72-1765.54-1763.20-1768.53 completed a complex semi-inverted corrective wave, and wave 2 from the 1775.22 high. This was followed by another decline to 1752.70 which completed today, and wave 3. This afternoon’s rebound to 1763.88 would seem to complete wave 4.

If this count proves to be correct, it would point to another move lower, which should complete at 1749-1750. BY my count, this would complete the fourth wave from 1646.47, and point to another move higher, with a target of 1782. This would be above the critical 1776 level I have been discussing for some time, and could possibly complete the entire sequence from the 1074.77 low.

Wednesday's Market 10/30/2013

As has almost become the norm, the SPX gapped higher to a fresh all time high, and then pulled back. After a 5 point drop the index tried to stage a rally, but breaking recent form the SPX then continued lower. The index drifted lower until the FOMC announcement, then bounced 6 points before heading for the lows of the day. The index moved down to 1757 before making it back up to 1766. The SPX then faded into the close.

This morning’s high of 1775.22 completed a 5 wave sequence from the 1740.50 low. This wave had been difficult to follow, but now seems to be 1758.46-1753.21-1764.99-1768.21-1775.22, with wave 4 being an inverted corrective wave. From the 1646.47 low, I count 3 waves. The first part of this wave counts best as a complete sequence from that low to 1758.16. The drop to 1740.50 was wave 2, and today’s high completed wave 3. If this afternoon’s low was wave 4, it would project wave 5 to complete between 1779 and 1798, with an optimal target of 1788. There are still several possibilities, so the next couple of days bear close watching.

At the moment it still seems most likely that the SPX will make one more high for this move, with a target of 1788, before a pullback. If this scenario does play out, there should be at least one more move higher before the sequence from 1077.74 concludes.

Near term support is at 1753, and then 1744.

Tuesday's Market 10/29/2013

The market continued its incessant climb today, hitting a fresh all time high once again. It seems that nothing can derail this freight train, or even slow it down. But the SPX is reaching some critical levels from my point of view, and this could get interesting very soon.

There is not much one can say about today’s market. The SPX gapped higher to a new all time high, pulled back a few points, and then moved steadily higher to close at another all time high of 1771.90. I have been expecting some sort of pullback, but so far none has been forthcoming. For some time now I have been pointing to 1776 as a minimum level for the completion of a sequence from the October 2011 low of 1074.77. Things seemed pretty clear when the SPX reached the 1560.33 low back in June, but things have been a bit muddled since. After the index reached 1710, and then fell to 1627, I described an ending scenario that would go something like 1745-1680-1776 to complete the sequence. The SPX fell short of that 1745 level, with the next top reaching only 1730. This complicated matters, and I began looking at a more complex end to this sequence. If this current move carries above 1776 this scenario may come back into play. If the SPX rises above 1796 this becomes a real possibility. A move above 1776 would also bring one other count into play that would suggest an end to the sequence from 1074.77.

For the moment it still seems likely that this market will eventually find a short term top, pullback, and then move to new highs. But a move above 1776, followed by a move below 1740, could signal a longer term top has been put in.

FOMC meeting days have been interesting, and this should be no exception.