Thursday Market Update 03/09/2023

 Today was an interesting day. A lot to update, so I'll get started. I mentioned in yesterday's update that a 5 wave sequence had completed Wednesday at 396.59. As of yesterday, SPY had moved off that low in three waves. Today's session started with some follow through from yesterday. An opening gap higher propelled SPY over the 400 level to a high of 401.48 shortly before 11:00am. For a brief moment it appeared the market may continue higher. After reaching that high, SPY started lower, looking to complete an inverted corrective wave before another move higher. SPY however broke through the lower boundary of that corrective wave, and continued lower the remainder of the day.

Shortly after noon, SPY had fallen to 398.15. After a very short rally attempt, the stock continued lower, dropping to 394.28 just after 2:00pm. After another feeble rally attempt, SPY fell to the low of the day at 390.53. Following a move higher, SPY closed the day at 391.58.

The first item of consequence today was the move to 390.53, which took out the previous 392.33 low. This clarified my dual count from this weekend. This would confirm my original count from the 418.31 high.

To review that count, I have the move to 407.57 as Wave 1. Wave 2 was an inverted corrective wave, shown here as Waves A, B, C, D, and E, with Wave E completing at 407.45. With a 5 wave sequence completing from that 407.45 high yesterday, we now show Wave 3 completed. The implication of this count is SPY should move lower.

I will cover the price action from yesterday's low in detail due to the ramifications of what appears to be unfolding.

 

Above I show my short term count from yesterday's 396.59 low. The most critical aspect of this count involves the move from 396.15 to today's 401.48 high. If this was a three wave move, it would imply much lower prices. If it was five waves, we could have seen a low today. As you can see, I have counted it as three waves. Due to the importance of this, I will provide the details of my count, and my reasoning. The move from the 396.59 low to Wave A seems to be straight forward. A single wave, supported by the 5D RSI. The move to Wave B again seems to be a single wave, once again supported by the 5D RSI. Wave C sub-divided into 5 smaller waves, as I have indicated. The count from Wave B is 396.95 - 399.16 - 398.63 - 400.62 - 399.97 - 401.48. That gives us (396.95, 399.16), (398.63, 400.62), (399.97, 401.48), with an R^2 value of .99308, completing a 5 wave sequence. Once again this supported by the 5D RSI. As you can see, the 5D RSI went from oversold at the 396.15 low to overbought at the Wave 1 high. Wave B saw the 5D RSI at oversold levels once again, and Wave C came with the 5D RSI at overbought levels.

Once again, this is the critical portion of the count. From Wave C, I have counted a 5 wave sequence down to today's 390.53 low. The first three waves came close to beginning of the wave. Starting from Wave 3, you can see an inverted corrective wave for Wave 4. This sequence went 399.41 - 401.08 - 398.15 - 399.30 - 394.28 - 394.92. Thus we have (399.41. 401.08), (398.15, 399.30), (394.28, 394.92), with an R^2 value of .99782.

We can then count the 5 wave sequence from today's high as 401.48 - 400.58 - 401.27 - 399.41 - 394.92 - 390.53, or (401.48, 400.58), (401.27, 399.41), (394.92, 390.53), with an R^2 value of .99385. This completes 5 waves from yesterday's 396.15 low. Using those 4 completed waves, we can now project the termination point of the fifth wave, Wave E. Because of the configuration of the first four waves, the fifth wave will need to complete below the fourth wave. The fifth wave given this scenario will need to complete below 379. In other words, this wave would need to trade below the 379 level, and then move up to complete below 379. Obviously this is an extremely bearish scenario. When that wave completes, it would likely complete Wave 4 from the 418.31 high. If this wave completes at 379, the lower range for Wave 5 would be 347. If the wave terminates below 379, that range would likely adjust downward.

Earlier I mentioned the importance of the move from yesterday's low to today's high. I will now illustrate that point. For arguments sake we will say that I am wrong in my count, and the move actually occurred in five waves. That would make today's high Wave 4 from the 418.31 high, and put us in Wave 5 from that point. Given the four completed waves the sequence would be 418.31 - 407.57 - 407.45 - 396.59 - 401.48 - X. if we use today's low for "X", we have (418.31, 407.57), (407.45, 396.59), (401.48, 390.53), which gives us an R^2 value of .999999. This means the sequence from 418.31 has likely completed. The lower limit for this scenario is 388, so a move below that would invalidate this scenario.

Given the current count, it appears SPY is headed below 379, and possibly down to new lows. This seems to be the majority opinion, which always sends up a red flag. However the count is pointing that way, so we will let it play out.

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Market Update 03/08/2023

 As we went into Tuesday's trading session, we were awaiting some resolution to the two counts I discussed over the weekend. A move above 411 would likely mean a 5 wave sequence had completed Thursday at 392.33. A move below 392 would mean a continuation of the move lower from 418.31. 

Tuesday saw a sideways opening, before moving decidedly lower following statements from Chairman Powell. SPY tested the 400 level after those remarks, falling to 400.51 before trying to rally. After moving slightly over the 403 level, SPY once again moved lower, this time breaking through the 400 level momentarily before trying to rally again. This time the rally fizzled at 402, and SPY fell to 397.63 before trying to rally into the close.

This morning saw SPY trying to find some stability, trading mainly between 398-400 until after noon. The 400 level is providing some resistance, and having failed to regain that level, SPY dropped lower to 396.62. A late afternoon rally found SPY once again moving towards the 400 level, but failed once again, closing out the session at 398.92.

Nothing that has happened over the past couple of days has changed our count. I continue to look at the 411 level on the upside, and the 392.33 low for an indication of which direction the market has chosen.

Shorter term, SPY may have put in at least a temporary low at today's 396.62 level. A short term count has SPY completing Wave 1 of a sequence from 407.45 at 406.23. The rebound to 407.38 off that low formed Wave A of an inverted corrective wave. Wave B of that sequence provided the most damage, carving out a lengthy 5 wave sequence that ended this morning at 396.83. The choppiness this morning completed Waves C, D, and E, to complete Wave 2 from 407.45. The late day swoon to the low of the day finished out the sequence at 396.62.

The rally off that low came in three waves, which may be the start of a move higher, or simply a respite from the past two and a half days of selling. 

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Monday Market Update 03/06/2023

 The market opened stronger today, continuing the late week rally that sprung from last Thursday's opening low. SPY gapped up, opening at 405.08, and remained strong through the early morning. The stock reached 407.45 shortly before 11:30. That proved to be the high of the day, with SPY drifting lower through the afternoon. With half an hour of trading left, SPY closed that opening gap. After hitting a low of 404.03, it once again pushed towards 405.00 into the close.

SPY remained below the critical 411 level I had mentioned over the weekend, so the two counts I reviewed thoroughly in the Weekend Update remain in play. The market is now at an inflection point, and how it reacts at this level will be pivotal.

Technically, SPY came off the overbought levels of the morning to finish the day in oversold territory on the 15 Minute chart. There is also a small positive divergence near the end of the day. 

Since I have been also following TSLA recently, I have decided to include that analysis here also.

Following the sell-off last Thursday that brought TSLA to 186.01, the stock rallied back to 200.48 on Friday. It was unable to hold the 200 level, and saw a bit of a sell-off into today. I continue to count the completion of a 5 wave sequence from 101.81 at 209.41. The following move to 186.01 could possibly be a correction low. 

Today's drop took TSLA into oversold territory on both the 15 Minute and Hourly charts, with a positive divergence on the 15 minute chart, which would be a good place to rally off of. The important levels to watch are the 186.01 low, and the 209.41 high.

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Stocks to Watch:

Here are a couple of stocks I will be watching on Tuesday.

AMGN:

AMGN gave a short term buy signal today. These signals usually last 1-3 days.

BIDU:

BIDU seems set up for a short term buy signal. While the signal has not been given yet, a higher open would likely trigger one.

PDD:

PDD is in the same position as BIDU. No signal yet, but a move higher from here would likely trigger one.