Monday's Market 07/21/2014

While the SPX did not move higher today as I had anticipated, my overall outlook that the index will soon make new all time highs remains unchanged.

The SPX started of lower this morning, falling to 1965.77 within the first hour and a half.  Once again, after that initial drop, the index spent the rest of the day in recovery mode, climbing back to 1975.83 before dipping into the close.

Obviously my short term count from Friday was incorrect, as the SPX did not move higher at the outset. Friday’s bounce from 1955.59 to 1979.91 now looks to be a simple 5 wave sequence to the upside, which was followed by a sequence lower this morning to 1965.77. My 10 Minute Chart shows the entire wave thus far from the 1952.86 low. Friday’s 1979.91 high can be seen as Wave 3, with today’s decline Wave 4. Wave 5 looks to be underway from 1965.77. So far it looks like the SPX has completed a Wave 1, followed by an inverted corrective Wave 2. If so, the index should now move higher to complete Waves 3, 4, and 5.

With the wave structure so far, Wave 5 from 1952.86 should complete above 2003, with an optimal target of 2018. Once this wave has completed, the SPX should undergo another shallow decline, followed by one more move to new highs. This would complete the entire sequence from 1074.77.

Short term resistance is at 1981 and then 1990-1999. Support is at 1961-1962. I am looking for the SPX to move higher, with a target as of now above 2003.

Friday's Market 07/18/2014

I will apologize in advance for this being a brief update. It was a very long day at the paying job, with another one on tap for tomorrow. I did however; want to comment on today’s market.

Yesterday I outlined two possible scenarios, one bearish, and the other bullish. The bearish scenario would come into play with a break below 1952.86, which did not happen. At least not today that is. Looking at the SPX from yesterday’s 1955.59, there was a small move to 1959.95 before the close, and then a slight dip. Today the SPX opened higher, and completed a 5 wave sequence from the slight dip (1957.68) at 1974.06. After reaching that point, the index chopped its way to 1971.80, and then completed another sequence higher at 1979.81. This was followed by a small pullback to 1976.64. The three small pullbacks, 1959.95-1957.68-1974.06-1971.80-1979.91-1976.64, can then be counted as an inverted corrective wave. The result is a Wave 1 to 1959.95, followed by an inverted corrective Wave 2 that completed at 1976.64. This would suggest a continuation of the advance from 1952.86.

From 1952.86 Wave 1 completed at 1969.84. Wave 2 was the very complex semi-inverted corrective wave that completed yesterday at 1955.59. In my model, waves are proportional dependent on the starting point of the wave. With the shortness of Wave 1 from 1955.95 to 1959.95, it seems likely that Wave 3 will be longer than that, and Wave 5 longer still. Wave 1 from 1952.86 was about 17 points. The current wave from 1955.59 is already over 24 points, and should eventually be even longer. If this is Wave 3, it would project Wave 5 to be extremely long. Given this it seems likely that the entire move from 1969.84 to 1955.59 was a Wave A of an even more complex corrective Wave 2. This would have the effect of tempering the length of the entire wave from 1952.86. I will keep an eye on this going forward. I will try to update again over the weekend at some point.

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.