Tuesday's Market 07/22/2014

It was another gap higher open to begin the day. After running up quickly to 1982.58, the SPX paused slightly, and then stair stepped to 1986.24. The index then traded sideways in a narrow range through mid-afternoon before breaking down to 1981.27. This was followed by a recovery to 1985.07 before a dip into the close.

5 Minute Chart:

Continuing my short term count from yesterday, the SPX followed up the inverted corrective Wave 2 with a 5 wave sequence to 1986.24. This completed as 1973.37-1982.58-1979.62-1985.06-1982.85-1986.24. Taking the points (1973.37, 1982.58), 1979.62, 1985.06), 1982.85, 1986.24), yields an R^2 value of .991167. The SPX then completed a sequence lower as 1986.24-1984.13-1986.13-1983.96-1985.35-1981.27, with the points (1986.24, 1984.13), (1986.13, 1983.96), (1985.35, 1981.27) having an R^2 value of .996333. After rebounding to 1985.07, the SPX dipped slightly. Short term support is at 1977, with resistance between 1990 and 1999.

10 Minute Chart:

The 10 Minute Chart shows the wave sequence from the 1952.86 low. So far the SPX has completed Wave 1 at 1969.84, which was followed by a very complex corrective wave to 1955.59. I have this labeled as Wave 2 on the chart. A sequence higher to 1979.91 followed, and then a sequence lower to 1965.77. I currently have these labeled as Waves 3, and 4. Given this count, Wave 5 would need to complete above 2003. There is also the possibility, as I alluded to a couple of days ago, that these waves are still part of an even more complex corrective wave from 1969.84, or the Wave 1 top. This scenario may come into play if the SPX does drop to 1977 as discussed above. I will cover this in detail when and if it happens.

60 Minute Chart:

On the 60 Minute Chart the completed Wave structures from 1814.36 to 1985.59, and 1985.59 to 1952.86 can be seen. These are labeled Wave D, and Wave E. Wave D completed as 1814.36-1884.89-1925.78-1968.17-1944.69-1985.59. These points, (1814.36, 1884.89), (1925.78, 1968.17), and (1944.69, 1985.59) have an R^2 value of .999222. Wave 2 was an inverted corrective wave with the points (1884.89, 1850.61), (1891.33, 1862.36), and (1955.55, 1925.78) having an R^2 value of .995999.

4 Hour Chart:

On the 4 Hour Chart, the entire sequence from 1560.33 can be seen. This is the sequence that needs to complete to end the larger sequence from 1074.77. So far I count 4 completed waves, 1709.36-1646.47-1850.84-1737.92. Given this structure Wave 5 can be projected to complete between 1957 and 2064.

2 Day Chart:

This is the Wave that most are waiting for. As shown on the chart, 4 waves have completed. The SPX is already within the range to complete this wave, however the smaller degree waves must resolve themselves before it can actually complete.

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.