Thursday's Market 07/17/2014

Today was a decidedly down day for the SPX. From yesterday’s 1983.94 opening high, the SOX completed a 5 wave sequence down to 1965.95. Although this fell exactly within the range I gave yesterday, I had expected 5 waves from 1982.45. This nullified my scenario from yesterday, and with the subsequent breach of the 1964-1966 support area, forced a re-evaluation of my count from the 1952.86 low.

I still have a sequence completing at 1969.84 from that low. Today’s 5 wave sequence from 1983.94 to 1965.95 completed an inverted corrective wave from 1969.84. This formed as 1959.63-1982.52-1965.34-1983.94-1565.95. With the bounce to 1975.99 that followed, the market action from 1952.86 can be counted as the first 3 waves of an inverted corrective wave, 1969.84-1965.95-1975.99. This would suggest the SPX is still in a corrective wave from 1985.59. A break below 1952.86 would confirm this. I would still be looking for this wave to complete above 1937.

Until the SPX moves below 1952.86, I will still keep my count of 1952.86 as the end of a corrective wave, and 1969.84 as Wave 1 of a continuing advance.  Under this scenario the 5 waves from 1969.84 can be seen as Wave A of a semi-inverted corrective wave1975.99 as Wave B, With Waves C, D, and E completing at today’s low of 1955.59. At the moment this scenario seems like the lower probability, but this market has liked surprises.

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.