Wednesday's Market 07/16/2014

Today started with a gap up which saw the SPX reach 1983.94 within the first ten minutes of trading. That turned out to be the high for the day as the index reversed quickly and gave back most of its gains, falling back to 1975.67. The SPX tried to rally back into the afternoon, but after reaching 1982.45 it reversed again, fading into the close.

I have relabeled the advance which began yesterday afternoon. It now appears to have been only part of a 5 wave sequence which concluded with this morning’s high at 1983.94. From that high it looks as if the SPX completed a sequence down to 1975.67, and then a sequence higher to 1982.45. I continue to see this as an incomplete advance from 1952.86, with the first wave of the sequence ending at 1969.84. The SPX then looks to have completed Waves A, B, and C of a continuing inverted corrective wave, with Wave C completing at 1959.63. The SPX now appears to be in a complex Wave D. There a many ways this can complete with the given wave structure, but I will outline the two most obvious ones at this point. I have added support and resistance levels from these two scenarios on the 5 Minute Chart. Again, these are simply the two most obvious of many short term scenarios.

Yesterday morning’s 1982.52 high can be counted as Wave 1 of D. The decline to 1965.34 can then be counted as Wave 2 of D, or Wave A of an inverted corrective Wave 2 of D. This morning’s high is then Wave 3 or B, the 1975.67 low Wave 4 or C, which then leaves us with the advance to 1982.45. If this turns out to be Wave D of 2, the Wave E low can be projected to be 1964-1966. 1982.45 may also turn out to be Wave 1 of 5 of D from 1959.63. If the first 4 waves of Wave D have completed as outlined above, 1982.52-1965.34-1983.94-1975.67, Wave 5 would project to 1986-1987.

To recap, with the given wave structure, there is support at 1964-1966. This would complete Wave 2 of D, and clear the way for a further advance. Resistance is at 1986-1987, which would complete Wave D of 2 from 1952.86. I would then look for a decline to perhaps 1975 to complete Wave E, and Wave 2.

Both of these are very narrow ranges, which opens the possibility that the SPX may clear them. A break above 1986-1987 would be bullish, and a break below 1964-1966 would not only be bearish, but might put my current count from 1952.86 in jeopardy.

Tuesday's Market 07/15/2014

The SPX started the morning by moving higher, in line with my analysis from yesterday. It appears the index did complete the sequence from 1959.63 as I had expected, although it was short of the 1991 level I had mentioned. That target was derived using a secondary technique, which is sometimes less accurate, so the 1982.52 high was acceptable. The SPX began to move lower from that point, and moved down to 1968.91 with only minor bounces. This was within the range to complete the inverted corrective wave from 1969.84, and the source of my call for an 8+ point pullback; however it did not reach this point with a complete 5 wave sequence. Instead, the SPX continued to fall to 1965.34 before completing the sequence, which was beyond the range to complete the inverted corrective wave. After completing that sequence, the index completed a sequence to the upside, bouncing back to 1976.16 before fading into the close.

Since it appears that the SPX has completed a sequence from 1959.63, but failed to complete the inverted corrective wave, today’s 1982.52 cannot be Wave D from 1969.84 as I anticipated, but more likely only Wave 1 of D. This would indicate higher levels for the SPX can be expected. If the SPX falls below 1959.63 at this point it would likely mean that the decline from 1985.59 is not over.

Monday's Market 07/14/2014

It certainly appears that Thursday’s 1952.86 low marked the end of the recent decline from 1985.59. If this count remains intact, it means that the SPX has completed the inverted corrective Wave 2 from 1737.92, and is now in Wave 3 as I discussed last week. When the index completes Wave 5 of this sequence it will complete the entire sequence from the October 2011 1074.77 low.

After falling to 1952.86 last Thursday, the SPX staged a rally to 1969.84, and then traded in a narrow range through the end of last week. The index appears to have formed a series of nested waves that eventually resulted in the gap up this morning and the ensuing rally to 1979.85. After reaching that high mark, the SPX then traded in a very narrow range for the rest of the day between that high and 1976.22.

The 5 Minute Chart shows the nested waves, which by my count contain four degrees of waves from the 1952.86 low. The first degree wave was the initial rally to 1969.84. The pullback from that high now appears to be three waves of an ongoing inverted corrective wave.  Following a lower opening on Friday to complete that 3^rd wave, a lesser degree Wave 1 formed, which was followed by a small pullback. The SPX went on to form two more lesser degree Wave 1’s, and then began to unwind all those nested waves. At this point it appears there is still more upside potential with the SPX now in Wave D of 2 from the 1952.86 low. Wave D should complete near 1991(1985-2002), which should then be followed by a pullback greater than 8 points to complete Wave 2. The index should then continue higher as it completes Waves 3, 4, and 5.

From this point the SPX should move higher to 1991 +/-, pull back 8+ points, and then continue higher.