Tuesday's Update 03/14/2023

 SPY gapped up this morning to 390.44 off yesterday's low of 385.05. The rise continued into midday, with SPY reaching a high of 393.45. After attaining that high, SPY gave back some of the gains through the afternoon, hitting a low of 387.05 after 3:00pm. From there SPY rallied again, finishing the day at 391.68.

If we look back at yesterday, a short term count becomes apparent.

From yesterday's early morning low, we see SPY rose in three waves to 390.39 Following that, we see a three wave decline to 385.05. Those waves can then be counted as Waves 1, 2, and 3, followed by three waves, A, B, and C of an apparent inverted corrective wave. This implies a move higher, followed by a decline. 

This morning we saw SPY rise in a 5 wave sequence, (385.05, 391.92), (390.37, 392.99), (391.90, 393.45), with an R^2 value of .99313. This move took us to 393.45, just slightly above the 393.16 high I talked about yesterday. This indicates the bearish count could be reversing itself. There are still a number of ways this could go, but for the moment it looks like the SPY has avoided the immediate move lower.

After that high, SPY moved lower, forming a Wave 1 at 392.01. From there we saw an inverted corrective wave, (392.01, 392.74), (391.57, 392.51), (388.35, 390.53), with an R^2 value of .9995. That completed Wave 2, and the entire sequence from 393.45 as (393.45, 392.01), (390.53, 387.71), (390.00. 387.05), with an R^2 value .99959. The rise from there can be seen as a Wave 1, followed by an inverted corrective Wave 2. 

Looking at the two days together, we can see that today's completed Wave D of the inverted corrective wave, and today's low Wave E, and thus Wave 4 from yesterday's low. With four waves completed, we can now project Wave 5 to complete at 393-395. 

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Monday Update 03/13/2023

 SPY gapped lower to start the week, opening at 381.93 and then falling further to 380.65. SPY then rallied off that low, moving into positive territory, and reaching 387.31. That was right at the 387-390 resistance level I mentioned over the weekend. SPY gave back some of those gains, dropping back to 383.65 before once again moving higher, this time to the upper edge of that resistance zone, topping out at 390.39. The rest of the session was spent in consolidation mode, as SPY fell back near 385 before trying to test the 390.39 high. It fell just short at 389.50 before falling back near 385 and closing at 385.31.

This is the chart I posted in the Weekend Update:

With this morning's opening decline I made some adjustments to the count for the last two hours of trading.

 

 

The count from the high just past 2:00pm turned out to be much more complicated than I originally thought. I will not detail the entire count, but it makes this morning's low the end of a 5 wave sequence that began with the 2:00pm high.

I noted over the weekend that I sometimes place an "X" at the termination points of waves until the count becomes clear. That count did become clear with this morning's low, and I have noted those counts. The first three waves from the Wave D low to the left of the chart became Waves A, B, and C. From Wave C, a 5 wave sequence ensued, terminating with this morning's low, completing Wave D.

In my discussion in Thursday's Update, I described an interesting set-up in the wave structure. We started with Waves A, B, and C, with Wave A being shorter than Wave C, and Wave D then completing below the Wave A origin. This is a bearish formation since Wave E would need to complete below Wave D. This can be negated by a move above the Wave C high. I mention this because the chart above now displays an identical pattern. This structure indicates a termination point for Wave E below 381. This matches almost exactly the targets I have been given for the previous wave of this type. 

If this wave structure holds, it implies a move below 366 before a rebound to below 378, based on some other projections I have worked up.

As I mentioned earlier, this structure can be negated with a move above the Wave C high, which gives some reasonable levels to watch. The Wave C high for the current wave structure is 393.16, and the Wave C high for the first wave I described on Thursday is 401.48. A move above either of those levels would mean some re-evaluation of the waves is needed.

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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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