Friday's Market 09/26/2014

It was a fitting end to a rollercoaster week that saw the SPX sell-off Monday, Tuesday and into Wednesday, rally sharply into Wednesday’s close, and then plunge on Thursday. Having completed a 5 wave sequence from Wednesday’s 1999.79 high at the close on Thursday, it was likely that the index would bounce at the open. It did just that, moving higher at the start of trading to 1972.16. The morning was choppy, as the SPX then fell to 1969.16, rose to 1975.69, and then moved lower again in three waves to 1969.80-1974.15-1967.92. The first three moves can be seen as Waves 1, 2, and 3 of a 5 wave sequence higher, and the last three as Waves A, B, and C of an inverted corrective Wave 4. Wave D turned out to be the bulk of today’s rally, as it drove the index higher to 1986.37. That was followed by one more pullback to 1981.07 that   completed Wave E, and thus Wave 4. If correct this would mean a continuation of the rally on Monday, with a minimum Wave 5 target of 1990.

Where this Wave 5 concludes could provide some important clues as to the next larger move. The key price to watch is Wednesday’s 1999.79 high. If this wave terminates below that level, it is likely part of a complex corrective wave from Wednesday’s 1978.63 low. This could take several forms, and possibly conclude between 1999.79 and 2019.26. If current wave concludes above 1999.79, this may be the start of a larger move to new highs. I will try to elaborate on these scenarios over the weekend.

Thursday's Market 09/25/2014

Last Friday morning the SPX touched 2019.26, which almost likely completed a 5 wave sequence from 1560.33, and possibly a sequence from 1074.77, all of which I have been mentioning for several days. It is far too early to call the rise from 1074.77 over, so it remains best to take this one wave at a time. After hitting 2019.26, the SPX declined into Wednesday morning completing a 5 wave sequence at 1978.63. After completing that sequence, the index staged a rally into Wednesday’s close, once again completing a 5 wave sequence at the high of 1999.79. That indicated at least a pullback for today, which turned out to be an understatement.

The SPX dropped precipitously at the outset, dropping to 1970.41. This turned out to be the first wave of a 5 wave sequence that then completed at the close as 1975.79-1966.80-1972.65-1966.56. With a sequence completing today at the low, the SPX should experience a bounce tomorrow. Resistance is at 1969 and then 1977.

Wednesday's Market 09/24/2014

After completing a 5 wave sequence from 2019.26 yesterday at 1982.86, the SPX looked poised for a move to the upside. The index did start off to the upside, moving to 1986.23 at the open. However, the SPX was not quite ready to break out. After opening higher, the index fell to 1980.68. The SPX then stair stepped lower, finally reaching 1978.63. From yesterday’s 1982.86 low the SPX formed an inverted corrective wave at 1986.23-1980.68-1983.80-1980.10-1983.10. Following that the index moved to 1979.06-1981.26-1978.63, completing a higher degree sequence from 2019.26 just above the 1976 target first mentioned on Sunday.

After reaching 1978.63 the SPX did rally sharply. The index ran up quickly to 1985.23, paused momentarily, and then continued higher to 1993.08, where another pullback took the index to 1989.90. The rally continued after that, reaching a high of 1999.79 just before the close, and completing a 5 wave sequence at that point.

With the completion of a 5 wave sequence at 1999.79, the SPX may experience a pullback from here. Support is at 1988, and then 1982. The next resistance level would be 2032. The SPX appears to be at another decision point; either move to new highs, or continue the decline.