Following through on yesterday
afternoon’s rally the SPX opened to the upside, reaching 1927.21 before reversing
direction. After dropping to 1909.00 the SPX rebounded slightly to 1922.02
before continuing the downward move to 1900.70. That turned out to be the low
of the day as the index once again staged an afternoon rally, moving back up to
1924.52.
The opening surge to 1927.21,
within the 1921.50-1935.32 range mentioned yesterday looks to have completed
the 5 wave sequence from 1880.38 I outlined yesterday. This means that from the
1935.32 high the SPX completed a sequence down to 1880.38, and then a sequence
up to 1927.21 that completed today. This can be seen on the 5 Minute Chart.
This chart should be viewed as something of a “working copy” simply meant to
track sequences, so the labeling will not match up to the other charts. This
scenario implies that the SPX should now continue downwards towards my 1748
minimum downside target.
The above scenario is my preferred
count, but there are a couple viable alternatives that are worth mentioning.
All of these scenarios imply that the current action from the 1880.38 low is
corrective in nature, with the only difference being the targeted high of the
move.
The first alternate counts the move
to 1899.48 as the first wave, but then counts the move to 1871.91 as three
waves, 1899.48-1880.93-1888.85-1871.91. These can be counted as waves A, B. and
C of an inverted corrective wave. The rally to 1916.60 would be wave D, and the
decline to 1897.05 wave E to complete the second wave from the 1871.91 low. The
third wave would have ended today at 1927.21, and the fourth today at 1900.70,
with the fifth in progress. The target for this wave would be 1930-1935.
For the second alternate I need to
start from last Friday’s 1921.50 low. The rise to 1935.32 would then be counted
as Wave A of an ongoing semi-inverted corrective wave. The 1880.38 low would be
Wave B, and Wave C would have completed today at 1927.21. Wave A of D would be
today’s 1900.70 low, with Wave B of D likely taking the SPX above 1935, so that
Waves C, D, and E of D could carry the index back into the 1935.32-1921.50
range. Wave E would then complete slightly above 1935.32. In rare cases these
waves can take on slightly different forms which may result in the SPX moving
higher than anticipated.
So the most likely scenario is that
the corrective wave completed today at 1927.21, but there is a possibility of
the SPX moving slightly higher without affecting my longer term 1748 target
level to the downside.
