Thursday's Market 09/11/2014

Ever since the SPX fell to 1074.77 in October 2011, the index has moved progressively higher. I have been counting this sequence as Wave 1 at 1292.66, Wave 2 at 1158.66, Wave 3 at 1422.38, and an inverted corrective Wave 4 which ended at 1560.33. Given this structure the minimum target for Wave 5 was 1776, with an optimal target of 2041-2046. The SPX surpassed the minimum target last November.

The Daily Chart shows the progress of Wave 5 mentioned above. Once again four waves of a sequence completed at 1709.36, 1646.47, 1850.84, and 1737.92. In this case Wave 2 was the complex inverted corrective wave. With four waves completed, a target range of 1957-2064 was indicated. From the 1737.92 Wave 4 low, Wave 5 then tracked fairly well into July when the SPX reached 1985.59. Wave 1 of 5 looked to have completed at 1882.35. Wave 2 of 5 then looked to be forming a complex corrective wave. Waves A, B, and C of this wave completed at 1814.36. A 5 wave sequence higher then followed which formed Wave D of 2. At this point the SPX seemed to vary from the script, as I was looking for a move lower to complete Wave E, and thus Wave 2. The lower limit of this wave projected to 1937. When the index fell to 1955.59, and then started to move higher, it looked like Wave 2 of 5 had completed. The short rally to 1991.39 was difficult to follow, and the subsequent drop to 1904.78 complicated things further. The best count for this is that Wave 2 of 5 did indeed complete at 1955.59. Waves 3, 4, and 5 of 5 then can be counted as 1968.84-1981.27-1991.39.This would mean that Wave 4 was also a complex corrective wave. This is rare, with usually only one of the corrective waves being complex, but something that is sometimes seen at the end of higher degree waves. With a 5 wave sequence completing within the target zones, it seems likely that the sequence from 1074.77 completed at 1991.39.

With the SPX having made new highs since then, the above statement seems a bit absurd. However, there are at least two scenarios in which this makes sense. First, either the wave from 1560.33 is extending, or the sequence from 1074.77 is extending. What I see as more probable is that the sequence from 1074.77 completed at 1991.39, and now the SPX is forming a complex corrective wave.  The decline from 1991.39 to 1904.78 counts as a 5 wave sequence and is likely the first wave of the corrective wave. Wave 2 is now underway, and has carried the index to new highs. This will likely form a semi-inverted corrective wave. After this wave higher completes, the SPX will likely move lower, finding support between 1991.39 and 1904.78. Eventually this sequence should complete below 1904.78.

The sequence from 1904.78 so far looks like a Wave 1 completed at 1944.90, with Wave 2 an inverted corrective wave that completed at 1982.99. A preliminary target for this wave is above 2031, but a more accurate target should be able to be calculated soon. There is a possible count that shows 2011.17 being the top of this wave, and a move below 1981 would likely confirm that.

Monday's Market 08/04/2014

Excuse the short update today. I have been a little short on time lately. After last week’s big decline, the SPX started tentatively today. The index moved slightly higher, and then slightly lower before going into rally mode.

Looking at the 60 Minute Chart, I have labeled 1985.59 as the end of a 5 wave sequence that was Wave D of an inverted corrective wave. I had then labeled 1952.86 as Wave E of that wave. From that point the SPX has formed a complex wave, with 3 waves up, and 1 wave down completed thus far. It appears that the index is still in a corrective wave from the 1985.59 high, and did not complete the correction at 1952.86. The rally from the 1916.37 low looks to have completed a wave up followed by an inverted corrective wave that may have ended this afternoon.

At the moment I am expecting this rally to reach 1944-1957 before ending. At that point it looks like the SPX will move lower and test the 1916.37 low.

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.