Tuesday's Market

The SPX spent much of the day working its way lower, trading within the recent 1775-1746 trading range for one more (last?) day. After opening lower to 1765.62, the index rebounded to 1772. Following that initial bounce, the SPX continued lower into mid-afternoon, dropping to 1762.32. The index spent the remainder of the day attempting a recovery that ultimately fell short of breakeven, but which may have formed a very near term bullish structure.

The move from Monday’s 1773.44 high to this afternoon’s 1762.32 low unfolded in a 5 wave sequence. This would appear to be a corrective wave that followed the rise from 1746.20 to 1773.44. Recall that my current count has 1746.20 as the termination point of wave 4 from 1646.47, making 1773.44 wave 1 of 5, and 1762.32 wave 2 of 5 from that low. From today’s 1762.32 low, a wave 1 to 1765.17, and an inverted corrective wave 2 ending at 1765.86 can be counted. This would imply that the SPX is headed higher in near term.

I am still looking at 1782 as a possible termination point for the wave from 1646.47. If the SPX reaches that level, it could mean the end of the sequence from 1074.77. A move above 1787 would likely mean a continuation of the move higher.

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.