Wednesday's Market 11/13/2013

I was a bit premature in calling yesterday afternoon’s low of 1762.29 the completion of a 5 wave sequence from the 1773.44 high. Instead of the SPX moving higher at the open, as I expected, it moved lower.  After gapping lower, the index reached a low of 1760.44 before heading higher. It did not take long for the SPX to close that opening gap, and after a brief pullback it continued higher until reaching 1776.33. As I have been pointing out, this was a critical level as it marks the minimum point at which the sequence from 1074.77 could complete.  From there the index underwent another very minor pullback before heading higher into the close. It closed on the high of the day at 1781.87.

Following the opening dip, the SPX completed a sequence at the 1781.87 high. Wave 1 finished at 1765.80, wave 2 at 1762.66, and wave 3 at 1767.73. Wave 4 was an inverted corrective wave which ended at 1773.49, with 1781.87 then completing wave 5. I had been looking for a move to 1782 to complete a sequence from 1746.20, and possibly 1646.47, which would in turn complete a sequence from 1560.33, and 1074.77. I had expected been expecting to see 5 waves from 1746.20, but at the moment I see only three waves at 1773.44-1760.44-1781.87.

If my current count is correct, that would mean the SPX should have at least one more move to the upside. This wave would have to complete below 1787 in order to complete a sequence from 1646.47. A move down to 1767-1773, followed by a move higher would target a level below 1787. A move above 1787 would likely mean a further continuation of this move, as hard as it is to believe. At the moment it looks like 1829 would be a minimum target.

There is an alternate count from 1646.47 that would not require another wave, and has an upside limit of 1791. This count has the inverted corrective wave 2 completing at 1746.20, wave 3 at 1773.44, and wave 4 at 1760.64. That makes the current wave the fifth and final wave.  This would complete the entire sequence from 1074.77.

A lot of variables I know, but the market is at one of those points. The current wave could complete between today’s high and 1791. A move below 1760.64 would likely mean the sequence from 1074.77 has completed. If the SPX moves above 1791, 1829 would be my next upside target.

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.