Monday's Market 10/13/2014

Thursday's Market 10/09/2014

It has been an interesting couple of weeks since the SPX hit an all time high of 2019.26 on September 19^th. The decline from that high began innocuously enough, with the index dropping to 1978.63. I am counting this as the first wave of a 5 wave sequence. The second wave unfolded as an inverted corrective wave, 1993.63-1966.22-1986.37-1964.04-1985.17. From 1985.17 the SPX declined sharply to 1926.03 and was followed just as quickly with a bounce back to 1977.84. Another sharp decline followed, this time to 1925.25. This again was followed by another swift bounce to 1970.36 yesterday.

I am counting the decline to 1926.03 as the third wave down from 2019.26, and the bounce to 1977.84 as the fourth wave. This count gives a target of between 1921 and 1907, with an optimal value of 1915 for the fifth wave.

While this could still go in several directions, I am looking for a move lower to 1918+/- to complete wave 3 of E. This should be followed by a bounce, maybe to 1930, and then a final move lower to 1915+/- to complete a 5 wave sequence from 2019.26. There is a chance the advance from there could be surprisingly strong.

Thursday's Market 10/02/2014

It did not take the SPX long to choose between the two paths I described on Tuesday. Wednesday the index opened decidedly to the downside, confirming the inverted corrective wave that terminated at 1985.17. The SPX continued lower from the open, falling to 1926.03 this morning with only two noticeable bounces along the way.

Once the SPX had fallen to 1926.03 by late morning, the first real attempt at a rally from the 1985.17 occurred. The index climbed steadily through the remainder of the day reaching 1952.32 before falling back slightly into the close.

I count nine waves from the 1985.17 high to the 1926.03 low. The first wave ended at 1968.96. The next five waves completed an inverted corrective second wave, 1977.73-1954.30-1964.33-1945.44-1951.10. The next three waves, 1934.82-1938.15-1926.03 then completed a 5 wave sequence.

Recalling the count from 2019.26, the SPX completed the first wave at 1978.63. The index then completed an inverted corrective wave at 1985.17. Notice that the end of this wave, 1985.17, completed above the termination point of the first wave, 1978.63. Sometimes this indicates the completion of only the first wave in an ongoing corrective wave. This may be a possibility in this case, with 1985.17 being a wave a, and today’s 1926.03 low being wave b. The short term count from 1926.03 indicates three waves, which would then complete the entire second wave from 2019.26 at 1952.32. I am now looking for three waves down to complete a 5 wave sequence from 2019.26.

My target for this initial decline from 2019.26 is 1917. This should complete with a move below 1932, a small bounce, and then a final decline to 1917.

If 2019.26 was the end of a sequence from 1074.77, several preliminary targets can be estimated. There a couple of interesting possible scenarios that I will elaborate on as this wave unfolds.  One of these scenarios suggests the SPX will complete this wave above 1881. Should that level be broken to the downside, I would look for a move below 1748.