Wednesday's Market 10/22/2014

The SPX did not hit y target price of 1960-1985 today, and then dropped below 1929.35, the point at which I said would invalidate my short term count. Given those facts, it is most likely that a 5 wave sequence from 1877.55 completed today at 1949.31 as 1877.55-1896.60-1891.55-1834.30-1929.3.5-1949.31. This also may have completed a sequence from 1835.02 as 1835.02-1867.82-1852.17-1898.16-1877.55-1949.31. If so, the next thing I would be looking at is an inverted corrective wave from the previous high, or 1869.00. The pullback from today’s high took the form 1935.24-1941.24-1926.83. The five waves from 1969.00, 1835.02-1949.31-1935.24-1941.24-1926.83, falls just shy of the requirements for a completed 5 wave sequence.

Yesterday I said that the SPX may undergo a substantial pullback once it completes the current wave. That now does not appear to be the case. If the SPX moves higher from this point, the sequence from 1835.02 is extending, pointing to higher prices. If the SPX drops, it would likely complete an inverted corrective wave from 1869.00, again pointing to higher prices. This inverted wave would complete anywhere down to 1907. With the index falling just short of the point needed to complete this wave, it seems more likely that the wave from 1835.02 is extending.

Tuesday's Market 10/21/2014

The pullback that I was expecting for today obviously never materialized. Instead the SPX continued to push higher with a vengeance. When I made a post on Sunday that I was looking for 1921 on Monday, I thought I was pushing it. Who would expect a 35 point daily move. The index did not hit 1921 on Monday, but made up for it with a 37 point move today.

I thought the SPX had completed a 5 wave sequence from Friday’s 1877.55 low to 1896.60 on Monday. This would have been Wave 3 from the 1835.02 low. Instead it turned out to be only Wave 1 of 3 from that low. The move from 1896.60 to the end of the day was an inverted corrective Wave 2, and Wave 3 of 3 looked to have completed today at 1934.30. The small pullback was likely Wave 4, with Wave 5 now underway.

Given this count, Wave 5 of 3 has a target between 1960 and 1985, with an optimal target of 1970. As I mentioned earlier, this looks to be only Wave 3 from the 1835.02 low. After a pullback, the SPX would still need to complete a 5^th Wave higher. Since Wave 3 is already quite a bit longer than Wave 1, Wave 5 should be even longer still. A decent sized pullback would be needed to temper the next move higher.

Once the wave from 1835.02 completes, the index will still need to complete the sequence from the 1820.66, so the possibility of a continued strong move to the upside exists. This could all still unwind without the market making new highs, but I prefer the count that has this move carrying to new highs, possibly 2070.  

Monday's Market 10/20/2014

The SPX started slightly to the downside today, dropping to 1882.30 at the open. The index then traded higher in choppy fashion until it reached 1896.60. At that point the SPX pulled back to 1891.55 before moving higher the rest of the day, topping out at 1905.03.

From Friday’s 1877.55 low the SPX completed a 5 wave sequence later that day at 1892.16. The drop this morning completed the first 3 waves of an inverted corrective wave that later completed at 1890.06. A quick move to 1895.97-1892.49-1896.60 then completed a larger degree sequence from the 1877.55 low.

This looks to have completed the third wave of a sequence from 1835.02. The pullback to 1891.55 looks to have been the fourth wave of this sequence, and the rise to 1905.03 then completed the fifth. This completes a sequence from the 1835.02 low. The SPX should decline from this point, with support near 1878.

Looking at the sequence from the 1820.66 low, the index completed the first wave at 1869.00, and has been forming an inverted corrective wave 2 since then. Today completed Wave B of that wave. Again, the SPX should now move lower, possibly to 1878. Whether that occurs as one wave or three will determine whether the index will decline further, or resume the move higher.