1921 On Monday?

Thursday's Market 10/16/2014

The SPX opened lower again this morning. After falling to 1835.02, the index began to rally. It rose in choppy fashion to 1876.01 before falling back into the close.

The SPX, although opening lower, managed to hold above the 1820.66 low. From that point the index looks to have completed a 5 wave sequence higher at 1876.01. The index looks to again be at a critical point. With a 5 wave sequence today 1876.01, there is a danger of the SPX again rolling over and continuing its slide. If this should happen there looks to be support at around 1819. At this point I am still looking at 1820.66 as a longer term low. My current count would have the SPX moving higher, with 1880 as a likely resistance level. If the index moves up to that level 1865 would become support.

Wednesday's Market 10/15/2014

It was a brutal day for the SPX, with the index plunging at the open to 1837.22. After a brief attempt at a rally that brought the SPX back to 1866.64, the index dropped once again, this time reaching a low of 1820.66.

I will be the first to admit that I have not tracked this decline very well, so I will proceed cautiously. The two scenarios I outlined for the longer term outlook yesterday remain intact. Short term, the SPX still looks to have completed a 5 wave sequence from 2019.26 last Friday at 1912.84. The quick choppy action from that point has been the problem for me. After today’s action it looks like the SPX completed an inverted corrective wave as 1935.56-1890.90-1912.02-1874.14-1898.71. So from 2019.26 the index could have completed Wave A at 1912.84 and Wave B at 1898.71. The first drop today may have been Wave C, the bounce to 1866.64 Wave D, and the final drop to 1820.66 as Wave E. This is supported to an extent by virtue of the SPX finally making a higher short term high by moving above the 1866.64 Wave D this afternoon. The move off the 1820.66 low also looks to be an incomplete wave, suggesting further upside is possible.

The short term wave structure suggests a move higher to the 1888 level, with some indications that if this does occur, it should happen early in the trading day. After that a pullback to 1847 seems likely. Obviously if the SPX drops below the 1820.66 low this scenario would be invalidated. Support is possible below 1810, but the next major support would likely be the 1748 level.