In Tuesday's Update I wrote this:
"The
initial move today to 398.34 met the requirements to complete Wave 5(Tan), and
Wave D(Green). The following pullback to 395.58, while slightly less than the
~5 points I had mentioned, then met the requirements for Wave E(Green), and
Wave 4(Green). Wave 5(Green), and the completion of the 5 wave sequence from
the March 13th low, then projects to complete between today's late afternoon
high, and 418. This would imply that the market is reaching a short term high."
SPY opened flat today, trading in a narrow range between 397-400 while it awaited the Fed announcement. When that came, volatility increased, and the initial reaction seemed to be positive. SPY ran up to 401.70 immediately following the announcement, but quickly dropped back to 397.40. SPY rallied again, this time to 402.49. That was to be the high of the day, as SPY soon fell to a new daily low at 395.67. A rally from that point soon evaporated, as SPY rose to 399.89 before starting a precipitous decline into the close, finishing the day at 392.07.
As it appears SPY has put in a short term top at today's high of 402.49, I can complete the count from the March 13th low of 380.65.
If this move down is merely a correction of the just completed sequence, we can make some projections. The first projection for a corrective wave suggests a move to between 390.7 - 392.5 with today's low of 392.07 within that range. This projection is based on the start point of the previous sequence, 380.65, the completion point of the sequence, 402.49, the previous high before the completion point of the sequence, in this case Wave D(green), or 398.34, and the correction low. It can be found by solving for (380.65, X), (X, 398.34), (398.34, 402.49), where "X" is the correction low.
Looking at the decline from today's high, we can see three waves down with the third wave subdividing. That subdivision so far is (399.89, 398.00), (399.27, 396.32), (397.43, 392.07). That has an R^2 value of .99887, so if today's low holds, we could see a move higher.
There is one final interesting thing about the decline from today's high. I have been looking at the March 13th low as the completion of a 5 wave sequence from the February 2nd high of 418.31. I did have a more complex count originally, especially concerning the last set of waves going into Wave 5 of that sequence. I originally had the move up into Wave 4(Purple) as three waves. The move into Wave 5 made this a particularly bearish scenario. I had relegated it to alternate status given the recent run-up, but today's action brought it back into play for the moment. The important part at the moment is the move into Wave 5, or alternately, Wave A?. The recent run-up would then be Wave B?. The three wave decline into today's close can then be seen as (393.16, 380.65), (402.49, 395.67), (399.89, 392.07), with an R^2 value of .99826. This count would suggest a move above 399 from today's low. Although originally a bearish scenario, this may now point to continuation of trading within the recent range.
For now, a move below 390.7 would be short term bearish. We may see a bounce from today's low. If we do, a move above 399 seems to point to more volatile swings up and down as we reconcile some of the previous wave structure. Depending on the structure, it may also mean a fresh move to the upside is underway. A bounce below 399, followed by a move below this recent low would also point to a more bearish scenario,
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