Wednesday's Market 07/23/2014

The SPX gapped higher again this morning, but this time quickly reversed and closed the gap within the first twenty minutes of trading. The index reached 1987.46 before falling back to 1982.44. The rest of the morning saw the SPX moving higher, making it to 1989.23. A decline to 1984.81 followed, with the index rallying back to 1988.73 before the close.

2 Day Chart:

This chart shows the main wave from 1074.77 that I have been tracking. So far the SPX has completed four waves of the 5 Wave sequence. Wave 1 completed at 1292.66, Wave 2 at 1158.66, and Wave 3 at 1422.38. Wave 4 was an inverted corrective wave, which completed as 1422.38-1266.74-1474.51-1343.35-1687.18-1560.33. The points (1422.38, 1266.74), (1474.51, 1343.35), (1687.18-1560.33) give an R^2 value of .995468. Given the waves already completed, a Wave 5 target can be extrapolated. The minimum value for this target is 1776, which has already been surpassed, with an optimal target of 2041-2046. The range for this target is admittedly large, so tracking the smaller degree waves should help narrow the range.

4 Hour Chart:

As shown on the 2 Day Chart, Wave 4 from 1074.77 completed at 1560.33. The 4 Hour Chart picks up the count from that point. Once again, it appears that the SPX has completed four waves of this sequence. Wave 1 completed at 1709.36, with Wave 2 being an inverted corrective wave that completed at 1646.47. Wave 3 completed at 1850.84 and Wave 4 at 1737.92. Again, with four waves completed, a Wave 5 target can be generated. This target is 1957-2064. Additionally, from the Wave 4 low of 1737.92, Waves 1, and 2 of 5 have completed, at 1882.35, and 1952.86, with Wave 2 being a very complex inverted corrective wave.

10 Minute Chart:

1952.86 is then the starting point on the 10 Minute Chart. So far, this wave also has completed four waves. Wave 1 ended at 1969.84, and was followed by another complex corrective wave, this time a semi-inverted one, which completed at 1955.59. Waves 3 and 4 can be seen as completing at 1979.91, and 1965.77. The target arrived at for this sequence is 2003-2060, with an optimal value of 2018.

5 Minute Chart:

With Wave 4 on the 10 Minute Chart completing at 1965.77, the 5 Minute Chart shows the progress of the wave from that point. This wave has also completed 4 of the 5 waves at 1971.20-1973.37-1986.24-1981.27. This structure gives a target for Wave 5 of between 1998 and 2008. When this wave completes, it will mark the end of the third wave from 1937.92 as seen on the 4 Hour Chart. I would then expect another shallow decline for Wave 4 and then one final move higher for Wave 5. This should complete the entire sequence from 1074.77 as seen on the 2 Day chart. 

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.