Wednesday 04/01/2020

Sorry I missed posting last night. I try not to interject personal things or opinions into the blog, because my objective is to analyze the market as best I can. While the rest of Illinois is under a "stay at home" order, I happen to work for an "essential business", and so, luckily, or unluckily, still working. Not in the medical profession, so not one of the "heroes", but it has been busier than usual. So doing my best to keep myself safe, and more importantly, more "at risk"loved ones safe. Hope everyone is doing the same. All about priorities.

But enough of that. Numbers keep me sane, so let's get to that.

Picking up where I left off, I mentioned on Monday that the 2631.80 high on the SPX might have completed a 5 wave sequence from the 2520.02 low. On Tuesday the SPX did open slightly lower, but soon moved higher, topping out at 2641.39. This was slightly above Friday's 2637.01 high, and looked like it might be a breakout to the upside. However, the index quickly reversed course, dropping to 2588.90, recovering a bit, then dropping again to 2571.15 before staging a small recovery into the close.

This morning the SPX gapped down at the open, dropping to 2486.22. After a short-lived rally attempt, the index fell to 2466.99, rose to 2494.67, and then fell to the low of the day at 2447.49 near the close.

My count from the 2191.86 low remains intact. I had mentioned that the SPX may have to correct from the 5 wave sequence starting at 2360.25, and ending at 2637.01. The support levels I gave for this scenario were 2482 first, and then 2402. As I have mentioned, some of these support levels are a work in progress. The levels I mentioned were derived using 2360.25 as the initial point. I noticed tonight that by using 2191.86 as the initial point, it would give 2443 as the ideal level, fairly close to today's 2447.49 low. Something for me to take note of.

So continuing my count from the 2191.49 low, the SPX completed Wave 1 at 2300.73. After an inverted corrected wave from there to 2360.25, the index then completed a 5 wave sequence at 2637.01 for Wave 3. The entire move from that high to today's low of 2447.49 would be Wave 4. If correct, that would mean that the SPX is about to embark on Wave 5. Given the wave structure thus far, Wave 5 would project to between 2749 and 2889.

With the markets as they are, and everything going on, I feel it is as important, if not more so, to know when you are wrong, as when you are right. So in that vein, a drop below 2360.25 would invalidate the count. Otherwise I am looking for the SPX to move up to the 2749 - 2889 level.

Monday 03/30/2020

At the open, The SPX rebounded slightly from Friday's late afternoon sell-off. Seems as though a lot of people are wary of holding longs over the weekend. After closing at 2540.21 on Friday, the SPX jumped to 2580.76 near the open, then settled down, trading sideways before continuing the move higher to 2611.93 before pulling back slightly to 2588.88. The index continued higher after that hitting 2680.31 before setting into the close at 2626.04.

For most of the last two days the SPX has traded within a range bounded by last Thursday's 2637.01 high, and Friday's early morning low of 2520.02. Today's move failed to breakout to a new short term high, so a move to slightly lower levels is still possible. My count from the weekend remains unchanged. From the 2191.86 low, the SPX completed Wave1at 2300.73. From there index formed an inverted corrective Wave 2, which ended at 2360.25. The SPX then rose in a 5 wave sequence to 2637.01 to complete Wave 3. Wave 4 may have ended with the small pullback to 2520.02, but without the index moving above 2637.01 that remains unconfirmed.

Until the end of Wave 4 is known, precise projections for Wave 5 cannot be made, but in an effort to give some interim targets, I will run through a couple of scenarios. If Friday's low of 2520.02 completed Wave 4, my current count would suggest a Wave 5 high of 2956 - 3089. But if that low holds, it also presents an alternate count suggesting 2690-2771 as the high. So a couple of levels to work with.

Shorter term, today's 2631.80 high may have completed a 5 wave sequence from 2520.02. I've hus added some short term support levels at 2584, and 2548.

If the SPX moves below 2520.02, support is at 2482, and 2402.

Market Meanderings 03/29/2020

It looks like I was premature in calling 2571.42 the completion of a 5 wave sequence from the 2191.86 low. Looking at the entire move from 2191.86 to 2637.01, one could make a case for the completion of a sequence. The three waves 2191.86 - 2300.73, 2407.53 - 2571.42, 2465.20 - 2637.01 would satisfy my model, however there are some issues with that count. First, the corrective wave still looks to be as originally labeled, from 2300.73 - 2630.25. In order for the the three waves mentioned to complete a sequence, the first three pullbacks, 2300.73 - 2198.98, 2436.88 - 2360.25, and 2501.57 - 2407.53, would also need to complete a sequence to from the corrective wave, and they fall just short of my model's threshold for that.

Keeping the original count intact, the subsequent move from 2360.25 to the high of 2637.01 does complete a 5 wave sequence, and so it would appear that only three of five waves have completed thus far. Support looks to be 2482.

Looking at the 60 Minute chart, I did update it to reflect the alternate count I had mentioned. The first move down from 3393.52 contained Waves 1, and 3, separated by a corrective sequence. So both Waves 2, and 4 completed corrective sequences.

The Weekly chart reflects my view that 3393.52 completed a 5 wave sequence from the 666.79 low. With a 5 wave sequence down from that high, the market looks to be at an inflection point. Was 2191.86 the low? Or simply a resting point? Things could be interesting from here, as the market always is.

I was asked in a comment recently how and why I turn waves into points for my analysis. Since I sometimes have trouble fitting my answer into the comments section, I'll try to answer it here. First, I do see markets moving in waves. When I started, discerning waves was somewhat subjective. I have attempted EW and other methods, so I tried to incorporate some of that. Through the years I have tried to become more objective in my methods, and I do use several technical indicators to help guide me. Most of my main waves seem to be consistent with more traditional methods, and I have used other counts I respected to ensure my model was not dependent on arbitrarily picking points. At times there is a bit of tracking smaller structures for my counts, and I won't go into a great amount of detail on that at the moment, but sometimes one must look at several time frames to see the entire picture.

So that is a little background on what I strive to do. As for turning waves into points, I don't know at what point I started doing that. I have for a long time looked for an objective way to find the ends of waves. At some point I noticed that visually there seemed to be some correlation between certain waves. Waves seemed to either all get longer, or shorter, but there seemed to be no real relationship between them, when taken as absolute moves in points. Then I realized through some work that the increase, or decrease, in the waves was dependent on the difference in the starting points of the waves. So although I use a linear relationship as the basis for my model, that does not make the moves in the market linear. Looking at waves as points is just the easiest way I have found to be able to use that relationship to extrapolate end points.

That is the easiest way I can describe it. And using the linear relationship is the easiest way I have found to track that relationship. I hope that answered the question. I'd be happy to go into more detail to anyone who is interested. Feel free to comment or email. I will try to address any questions as best I can.