Thursday's Market 07/31/2014

The SPX opened lower today, falling sharply to 1953.42, where it paused briefly, only to resume the decline shortly thereafter. This time the index fell to 1937.46. Again it tried to recover, but it was a weak attempt, making it back only to 1944.19. From there the SPX continued to fall into the close, hitting a low of 1931.09.

The SPX opened right at the 1949-1955 level where it found momentary support. The expected rally from that point did not materialize, and the index broke through that support level quite handily. The next level of support came right at the 1937 level. This was the minimum level the SPX could decline to given my current count. Again that level did not hold, as the index moved lower to 1931.

Given the facts that the SPX had moved into the range to complete a 5 wave sequence from both 1560.33 and 1074.77, and that it has moved below what I considered major support levels, it appears likely that the index has put in a major top. I have not been able to review my charts as completely as I would have liked today, so this is based more on the facts above than a revised count. I still do not see a clear sequence from 1560.33, but at the very least my count from that point is suspect.

To be clear, if this is a top from 1074.77 there should be at least one, and most likely two, moves to the upside before this bull market concludes. I will try to give a more complete analysis in the upcoming days.

Wednesday's Market 07/30/2014

After opening higher, the SPX reached 1978.90 before changing direction. The index quickly declined to 1962.42 before rebounding to 1976.24.

Yesterday I mentioned that I was waiting for some very short term waves to resolve themselves. Part of that began today with the open into the 1978 area I had indicated might be important. This seems to have completed a Wave D from 1979.95. This can be seen as the red A, B, C, and D on the 5 Minute Chart. Wave E has a target of 1945-1955. This target calls into question my count from the 1985.59 high, or Wave D in yellow on the 4 Hour chart. Since this target indicates that the previous low from that high, 1952.86 may be taken out. If that occurs it seems likely that the corrective wave from 1985.59 has not yet completed. I would still expect this wave to remain above 1937.

If this plays out I will explain the implications in more detail. For now, it looks like 1945-1955 is the next target. I would then be looking for a bounce to 1969.

Chart of the Day:

Tuesday's Market 07/29/2014

I had thought that the SPX had put in a bottom last Friday at 1974.37. That was not the case. After an afternoon rally on Friday, the index failed to follow through on Monday, moving down sharply to 1967.31. A strong rally followed that drop, lifting the SPX to 1984.85. That rally ended this morning, and the SPX moved lower once again, first to 197.53, and then 1970.34.

My longer term view remains unchanged. The SPX, in my view, still needs to complete several waves up to complete the sequence from 1074.77. The shorter term outlook is not as clear. The simple view would be to see the move lower from Friday’s rally as part of an inverted corrective wave from 1986.24. There are several very short term waves that have not been resolved in my opinion, and so I am hesitant to be overwhelmingly bullish. For several reasons I still think the SPX is in a complex corrective wave from either 1986.24, or 1969.84, although it is likely that the index has put in the low of this corrective wave.

It does appear that a wave completed today at 1970.34. The SPX should move higher at the open tomorrow, possibly to 1978. And now that I’ve written all that, I have just seen a quite elegant solution. A complex inverted corrective wave may have bottomed at 1970.34. If the SPX can move above 1978, it should continue to rally.

Charts of the Day: