Monday's Market 11/11/2013

The SPX opened slightly lower this morning, dropping to 1767.85 before staging a small rally to 1773.44. After that point it seems the market closed early, as the rest of the day was spent in a very narrow range. It has now been nearly two weeks since the SPX hit an all time high of 1775.22, just below the critical 1776 level I have mentioned for some time. Since then the index has dropped to 1752.70, right at the 1753 support level, rallied back to 1774.54, and then dropped to the secondary support level of 1744. The market again has rallied, with the SPX now at 1771.80.

The 1776 level is critical from my standpoint, because it is the level at which a 5 wave sequence from 1074.77 could possibly complete. Picking up from my last count from the 1646.47 low it appears the market has now completed 4 waves of a sequence. Wave 1 completed at 1703.44, and was followed by an inverted corrective wave 2 which completed at 1740.50. There are a couple different ways to interpret the move since then, with one scenario having the all time of 1775.22 as wave 3, which was followed by a lengthy wave 4 which completed at 1746.20. It is also possible that wave 3 was the lengthy wave, and completed at 1774.54. The subsequent drop to 1746.20 was then wave 4. I prefer the second scenario at the moment, but it has little effect as far as projections go for wave 5.

At this point, I would give 1782 as the target for this wave. That would also be a point at which a sequence from 1074.77 could complete. If the SPX gets to that level, I will go into more detail about that. This is a difficult market to be completely certain about anything, so the there are several levels to watch for further guidance.

If the market pulls back from here, without moving above 1776, I would still prefer the scenario of the index staying above the previous low of 1646, and then making at least one more higher high. If the SPX gets to near 1782, and then starts to pullback, chances increase that the sequence from 1074.77 has completed. A move above 1787 and this market may continue to move higher. The market should resolve this soon.

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.