Tuesday's Market 09/25/12

 

The market opened higher today, completing a higher degree 5 wave sequence from 1452.06 at 1462.80, and yet another higher degree sequence at 1463.24. This turned out to be the high of the day, as the market went into selling mode from this point. By early afternoon, the market had fallen below yesterday’s close, and after a short rebound, continued the rather steep decline. A 5 wave sequence from the high was completed at 1450.23, and another higher degree sequence completed at the day’s low of 1441.65.

 

The move higher completed in a sequence of diminishing wave length sequences, which usually precedes a precipitous move in the opposite direction. That proved to be the case as the market moved sharply lower, interestingly enough in another series of diminishing wave length sequences. This may presage a sharp move higher from this point.

The early move higher was expected, but I had not anticipated the sharp move lower that followed. When the market moved below the short term 1449.98 low, my interpretation of an inverted corrective wave 2 playing out from 1438.74 was no longer valid. The most likely scenario at this point is that wave 2 completed at 1428.98, following the 1438.74 high. From there, a 5 wave sequence completed at 1474.51 and another at 1441.65. This could be waves 1, and 2 of the next sequence higher.1428.98 now becomes the critical level. If the market breaks below that, this correction could move longer lived.

 

Short term support is now at 1426. A move above 1448.05 would most likely mean the market is headed higher once again, possibly towards 1497.

Monday's Market 09/24/12

 

The market opened sharply lower today, dropping quickly to 1452.06. After that the market staged a rally that lasted into the afternoon. After rising to 1456, the market fell back to 1453, and then moved higher to 1458. Another pullback dropped the market back to 1454, before the final stage of the rally took the market to 1461. After that the market moved lower into the close, falling to 1456.51.

 

The opening drop today stopped at the lower end of the 1455-1452 support level I mentioned over the weekend. It looks like I had the count from 1466.76 slightly wrong, with this morning’s drop likely the completion of a 5 wave sequence from that high. The rally off the 1452 low formed a 5 wave sequence that ended at 1460.72, which was then followed by a 5 wave corrective sequence down to 1456.51.

 

My current count still has 1438.74 the completion of a 5 wave sequence from the 1267 low, with wave 2 of that sequence likely terminating at 1449.98. I continue to look at 1497 as the next target.

Shorter term, support should remain at 1452. Short term resistance should be 1462 first, and then 1466-1470.

Weekend Outlook 09/23/12

 

After having reached a new uptrend high of 1474.51 the previous Friday, the market started off the week by continuing to consolidate those gains. Monday proved to be a down day for the market, with the market falling to 1456.13. After hitting this point, the market tried to rally over the next several days, but that rally was somewhat subdued, with the market making it back only to 1465.15, before turning lower once again. The market then dropped sharply at Thursday’s open, falling to 1449.98. The market staged a more robust rally from there, rising to 1461 on Thursday, and then opening strongly to the upside on Friday, hitting 1467.07 before falling back. By the end of the day Friday, the SPX had given up its earlier gains, dropping back to 1459.51 near the close.

 

My current count had the high of 1438.74 that occurred on September 10^th as the completion of a 5 wave sequence from the 1267 low. From that high, the market has now completed an inverted corrective wave 2, which ended at Thursday’s low of 1449.98. This sequence took the form 1438.74-1428.98-1274.51-1456.13-1466.76-1459.51. If this count proves to be correct, I would expect a resumption of the uptrend. My target for the next move higher remains 1497.

Short term support is 1455-1452 if the market moves lower; with a move below 1449.98 most likely meaning my count is wrong.