Weekend Update 02/11/2024

 This week saw a continuation of the rally that has seemingly been non-stop since the October 27,2023 low of 409.21. Monday saw an early pullback of about 4 points from Friday's close, but reversed off the 490.23 low, closing down only slightly. Tuesday saw some continued consolidation as SPY traded in a narrow range between 492 and 495. Wednesday saw the SPY eclipsing Friday's close, with a strong gap up, and continued strength during the remainder of the day that brought SPY within shouting distance of the 500 level. Thursday was another narrow range day, as SPY consolidated just under the 500 level. SPY moved higher again on Friday, and finally did rise above the seemingly inevitable 500 mark. That level then provided support, and SPY closed out the week at 501.20.

On the Daily Chart we can see the 5 wave structure taking shape off the October 13,2022 low of 348.11. The initial rise off the low was choppy, but did complete a 5 wave sequence higher into the February 418.31 high. SPY pulled back into March, but then showed a stronger leg up into July. The market then declined into the end of October, and we can see this as the completion of an inverted corrective wave from the 418.31 high. This would mean that 2 waves of the 5 waves completed at that point. Wave 3 looks to have completed in December, with the slight pullback at the beginning of this year completing Wave 4.

With four waves completed, we can make some projections for the completion of this wave. Given the current count, Wave 5 should complete between 517, and 556. We will be keeping an eye on the 15 and 60 Minute charts to help narrow down that range as we move closer. We will also be looking at some projections for how deep the correction may be.

Tuesday Update 03/28/2023

 SPY opened to the downside this morning, and continued lower most of the day. We can count a 5 wave sequence from yesterday's early morning high as (398.92, 395.56), (398.27, 394.97), (396.21, 393.69), with an R^2 value of .993304. This sequence completed above our targeted range of 391.5-390.7, which increases the probability that the overall wave may be more complex than originally anticipated. 

There are several scenarios at this point, and so it is more relevant to point to levels of interest than describing those options. 391.5-390.7 remains a target on the downside. We can now estimate a range on the upside of 397.6-398.3. Once again this is a very narrow range that is more easily broken to the upside. A move above this level would point to a further upside move with an initial working target of 404-408.

Should the 397.6-398.3 level hold, this still remains a bearish count.

Thank you for your continued support.

Monday Update 03/27/2023

 Since I have been following the wave from last Thursday's 390.54 low, I will begin from there. Over the weekend I had set a target for the completion of this wave between 395.7 and 398.2. The wave ultimately completed in a different fashion, and so my target was slightly off. 

 

Here we can see that from that low, SPY completed Wave A at 394.77. Wave B completed at 389.40, and Wave C at 392.52. Wave D was a complex wave that finally terminated at 393.04. We can the see Waves 1, 2, and 3 completing into Friday's close. The slight pullback from Wave 3 into the close became Wave A of a inverted corrective Wave 4. Thus SPY opened to the upside, reaching 398.68 before a slight pullback as 397.88-398.17-397.41. This, combined with the slight pullback into Friday's close, completed Wave 4. SPY made one more move higher, this time to 398.92, which completed Wave 5. This sequence completed as (393.04, 395.14), (394.05, 395.84), (397.41, 398.92), with an R^2 value of .99773. From that point SPY traded in a narrow range between that high and 395.56.

The completion of the 5 wave sequence this morning in turn completed Wave E(Purple), and thus Wave D(Green). This sequence can be seen completing as (390.54, 394.77), (389.40, 392.52), (393.04, 398.92), with an R^2 value of .99818.

 

The completion of Wave D brings us back to the count we have been watching for some time. The target implied by the four completed waves would be between 391.5-390.7. This would then complete Wave D(Red), and and imply lower prices, possibly testing the previous lows. Should this scenario play out, it would look something like a move into the 391.5-390.7 target area, followed by a bounce which could be slight, and then a move below the target area. 

At this point, two alternate scenarios may emerge. The implication of the current structure is bearish. One way to reverse this bearish course is to now break above the Wave D high of 398.92. This would set up a bullish scenario.

That would be the first alternate, with the second alternate pointing to an even more bearish scenario. The target I mentioned for this wave is quite narrow, and in many cases this allows for a "jump" of the target. In essence moving below the target area in this case. This would point to Wave D(Green) being only the first wave of an inverted corrective wave which would carry SPY even lower.

Again, it is difficult to try and get too far ahead of this market. I will continue to closely monitor the situation. The key points for now are the 398.92 high on the upside, and the 391.5-390.7 target on the downside.

Thank you for your continued support.