Friday's Market 02/28/2014

I had thought that a break out in one direction or another would provide some clarity. The SPX provided a breakout, but unfortunately not much clarity. I am a little limited on time today, but I will post my current counts and try to give some narrative. I will try to address it in more detail over the weekend.

On Thursday the SPX completed a semi-inverted corrective wave from Tuesday’s 1847.60 high. That does not seem to complete the entire corrective wave however. The SPX broke higher this morning, indicating a further move to the upside as I explained yesterday. After completing the semi-inverted corrective wave, the SPX formed two additional waves before the close. This morning the index move slightly higher, and then pulled back, forming waves 3, and 4. Then the rally ramped up, and the index rose to 1860.69, completing a 5 wave sequence. An inverted corrective Wave 2 followed, and then Waves 3, 4, and 5 took the SPX to 1866.16. I see this as a single completed wave from the completion of the semi-inverted corrective wave yesterday. The index then pulled back in three waves. I believe this to be the completion of the very complex Wave 2 from Tuesday’s 1847.60 high. The index then moved slightly higher, which appears to complete Waves 3, 4, and 5, finishing a sequence from 1840.19. After that the SPX decided to throw a curveball. The index plummeted from the 1867.92 high back to 1848, and then tried to recover, bouncing back to 1860.68.

Again, I will try to address this in more detail, but for now there are a couple of scenarios. Looking at the count from the 1737.92 low, the SPX completed the first wave at 1858.71. The pullback to 1840.19 may have been Wave 2, today’s 1867.92 high Wave 3, and today’s drop to 1847.67 Wave 4. This would give a Wave 5 target of 1867-1870. This is a very narrow range, so it would need to land almost exactly at that level. Another option is that the SPX is forming an inverted corrective wave from the 1858.71 high. The drop to 1840.19 would be Wave A, today’s high Wave B, followed by the drop for Wave C. Wave D may have then completed at the bounce back 1860.68 high, giving a target for Wave E of 1842. Otherwise Wave D may still be in progress. Right now it looks like 1868 and 1842 are the points to watch.

Thursday's Market 02/27/2014

The SPX opened slightly to the downside today, but quickly recovered and moved above yesterdays close to 1847.04. This completed a 5 wave sequence following the completion of the semi-inverted corrective wave yesterday afternoon. From there the index again pulled back, falling to 1841.13. After that the SPX embarked on a more sustained rally, completing a 5 wave sequence to the upside at 1854.53. Another pullback, this time to 1849.93 was followed by three waves to the upside as 1853.51-1850.19-1854.13.

Putting today’s action together with the completed waves from 1840.19 reveals that a 5 wave sequence from that low may have completed at today’s 1854.13 close. From that low, Wave 1 completed at 1847.60. A quite complex semi-inverted corrective wave, which I have been describing the past two days, then completed a second wave yesterday at 1840.91. This wave appears to have been Wave A of a continuing Wave 2. Wave B was completed with the opening move higher, and was followed by the drop to 1841.13 which completed Wave C.  The extended rally through the afternoon to 1854.53 completed Wave D, with the pullback to 1849.93 Wave E, and finally Wave 2 from 1840.19. The three quick waves into the close then may have completed Waves 3, 4, and 5.

This count would indicate that a pullback from here is likely. Until the SPX breaks below 1840.19 it is possible for the index to move higher, but with a 5 wave sequence from that low, it appears likely that the next move will be lower. It is also possible that the SPX is still in Wave3 from 1840.19. The upper boundary for the 5 waves completed scenario is only slightly above today’s close, so any move to the upside at the open would suggest this is the case. I would still be looking for a move above 1858.71 to confirm a move higher is underway.

Wednesday's Market 02/26/2014

The SPX moved higher at the open today after completing the semi-inverted corrective wave at 1842.43 yesterday. That seems to have been only Wave A of a larger degree semi-inverted corrective wave. That wave completed today at 1842.43-1849.23-1843.47-1844.7-1840.91. That would indicate that at least the short term bias is to the upside. This may still be only part of a corrective wave from the 1840.19 low. If this move carries above 1858.71 the SPX is likely to move higher. A break below 1840.19, would likely been this correction has further to go, but I would still look for a break of 1835.60 to totally confirm this.