Weekend Update 03/12/2023

 The market started off the week on a positive note, with SPY reaching 407.45 Monday morning after closing the previous week at 404.12. That proved to be the high for the week, as the market stumbled through a tumultuous week. SPY worked mostly lower Monday after the higher open, and carried those losses into Tuesday. Wednesday's trading was mostly flat, and Thursday saw a higher open, peeking once again above 400 before dropping to near 390 by the end of the day. Friday's market was choppy, with a lower open, a move back into positive territory, and a sell-off below 385 to close out the week.

On Thursday I detailed a count projecting a move below 379, and possibly a test of the 348.11 low. That remains my count, but with the current uncertainty in the market, I will be monitoring that closely. I will pay close attention to short term waves, and give what I feel are important levels to watch. With that in mind, we'll take a closer look at Friday's action.

As these waves can resolve themselves in several ways, I have denoted the major waves with an "X", and have counted out the sub-waves when applicable. 

SPY traced out 3 waves off the Friday morning low, the second sub-dividing into a 5 wave sequence. From there, there were 3 waves down into the 2:00pm hour. The choppy trading from there looks like two waves, with the second wave a complex corrective wave. The 1 - 2 set-up points to a move higher to begin. One possible count would call for a move higher to the 387-390 level, followed by a move down to 383. 

Short term, the 391 level will be the area to watch. if the 387-390 resistance holds, an initial move to 383 is likely, with a small rebound, and then further lows below 379. A break above 391 would indicate a very complex corrective wave from the morning 393.16 high, and most likely a move above that level, possibly testing the 400 level again.

I'm not going to get too far ahead of myself. At the moment it will be best to take one wave at a time. If we do test the 400 level, the key point will be the 401.48 high. A break above that could mean a change in the overall scenario.

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Friday Update 03/10/2023

 In Thursday's Update I made my case for 5 wave sequence having completed on Wednesday, with SPY now being in a sequence that should take it below 379. SPY gapped slightly lower 391.00 to begin the day, then quickly found itself moving significantly lower to 387.48. From that low to midday, SPY worked higher and made it into positive territory for the day, climbing to 393.16. From that point, until the 2:00pm hour, SPY worked lower again, with only one small rally attempt. Shortly before 2:00pm it found itself at 384.32. The following hour saw a rally to 388.42, but SPY dropped near the low of the day again in the final hour of trading, closing the week at 385.92.

My count remains the same from yesterday. I will post a more detailed analysis over the weekend.

Thursday's Update

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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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