In Friday's Update I outlined the start of what appeared to be a bullish sequence beginning from Friday afternoon's low. This sequence played out this morning as SPY opened with a gap to the upside, opening at 391.21, and then continuing higher to 391.85. SPY then entered a consolidation pattern, trading between that high and 390.07, which closed the opening gap. SPY then moved to a new intra-day high at 392.69, before pulling back to 391.16. From that point, SPY showed continued strength nearing mid-day, and hit a high of 394.17. Once again SPY pulled back, falling all the way back to 390.73 before regaining strength heading into the close. SPY made it back above 394 before pulling back slightly to close the day at 393.67.
Monday, March 20, 2023
Saturday, March 18, 2023
Weekend Update 03/18/2023
The week started on a bearish note, with SPY gapping down Monday morning to 380.65. This set up a bullish divergence on the RSI(5) for both the 15 and 60 minute charts. The gap down was followed immediately by a reversal and a fill of that opening gap. The rally off that low continued into Tuesday, where a reversal to the downside carried into Wednesday, and brought SPY back down to 383.71. By mid-day Wednesday SPY was on the upswing again, lifting it to 396.47 just before Thursday's close. SPY finished the week with a gap down, and this time the bearish sentiment carried into the close. SPY closed the week at 390.12.
The current count from Monday's low has SPY in Wave D(Purple). This wave is itself sub-dividing, with an inverted corrective Wave 2 possibly having ended Friday. This would put SPY in Wave 3 of D. My working target for the completion of the wave Monday's Wave D low is above 404.
On the 60 Minute chart, we can follow the sequence from the 418.31 high. Wave 1 terminated at 407.57, and was followed by an inverted corrective Wave 2. This completed as (407.57, 416.49), (405.01, 415.05), (392.33, 407.45) with an R^2 value of .99992. Wave 3 then completed at 396.59. From that point, things became slightly more complicated. I have been counting the bounce off the Wave 3 low as having occurred in three waves, which would have a very bearish connotation as I discussed last weekend. Until SPY breaks above that high, which was 401.48, that bearish scenario is still in play. But if the current shorter term count plays out, that high will be exceeded, so there is an alternate count to consider.
Friday, March 17, 2023
Friday Update 03/17/2023
It was another gap down opening for SPY. It opened at 393.12, and spent the first hour and a half bouncing between 392.24 and 394.40. That was followed by the most damaging move of the day, taking SPY down to 388.56. The remainder of the day was spent in a narrower range between that low and 391.78, although a very slightly lower low was made late in the day at 388.55.
From yesterday's late afternoon high, we can count the initial move lower to 392.24 as a Wave 1. Wave A of an inverted corrective move occurred soon thereafter at 394.40. Wave B, as is often the case, was the most damaging move of the day. It subdivided into a 5 wave sequence of it's own, which we can count as (394.40, 392.38), (390.98, 389.01), (390.25. 388.56), with an R^2 value of .9967. Waves C, D, and E carried us to the afternoon high of 391.78. This completed Wave 2 as (392.24, 394.40), (388.56, 390.18), (389.76, 391.78) with an R^2 value of .99646. Waves 3, 4, and 5 then carried SPY to the late afternoon low of 388.55. This completed the 5 wave sequence from yesterday's late afternoon high as (396.47, 392.24), (391.78, 389.9), (389.63, 388.55) with an R^2 value of .9967.
Once that low was put in, SPY seems to have managed some constructive work in the last hour. it appears to be the beginning of a sequence that has started with a Wave 1 at 390.05 followed by an inverted corrective wave (390.05, 389.20), (390.87, 389.60), (390.52, 389.44), which has an R^2 value of .99906. If this count proves correct, it implies a move higher.
Widening out to look at the last two days, we can now continue the count from Wednesday's low. From that low, SPY completed two waves higher Wednesday afternoon, and began a fourth wave that terminated Thursday morning. After hitting that low, SPY began yesterday's very strong move to the upside. The move occurred in a 5 wave sequence as (386.29, 394.45), (392.40, 396.14), (393.62, 396.47), with an R^2 value of .99999. Count the first wave off Wednesday low as Wave 1, followed by Waves A, B, and C, yesterday's move becomes Wave D. The sequence from Wave 1 to today's low becomes, (386.57, 385.44), (389.49, 386.29), (396.47, 388.55) which has an R^2 value of .99945.
This count implies that SPY is still in the sequence that started on Wednesday, and is in Wave C of that sequence. Following the completion of this sequence, I would still expect the approximately 5 pint decline I talked about yesterday. So we may be in a trading range waiting on the Fed decision. Time will tell.
I will update some of the other wave structures over the weekend.
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