Thursday's Market 05/30/2013

The market continued the rally from Wednesday’s 1640 low, opening higher and continuing higher throughout most of the day. After some choppiness at the open, the SPX rose steadily until it reached 1659.27. Yesterday I gave 1659 as a first target for this move. After pulling back to 1654, the SPX moved above 1660, and then pulled back to 1656. One final move higher to 1661.91 followed, but was met with some selling pressure, as the index quickly fell to 1654. The 1661.91 high was slightly below my 1665 target.

My count has the 1657.29 as the completion of a 5 wave sequence from yesterday’s 1647.69 low. This is what I thought would be Wave 4 from 1640.05. This was followed by a sequence down to 1654.27, which should have been Wave 4, and a sequence higher to 1661.91. This should have completed Wave 5, and a sequence from the 1640.05 low. However, when I put this series together, 1640.05-1648.38-1647.63-1657.29-1654.27-1661.91, it does not meet the threshold for a completion of that sequence. That would indicate that this move higher has further to go. If the SPX gets above 1662, the count I am looking at would indicate a move near 1700 is underway. This would project to the same area as a possible 5 Wave sequence from 1635.53.

Until the SPX moves above 1662, it is still possible that the market is still in a correction from the 1687 high. Any move below 1635 would mean a further decline is likely.

Thank you.

Wednesday's Market 05/29/2013

Not very long ago the market was going straight up, with barely a correction. It has now seemed to turn into a market that makes large moves in opposite directions from day to day. The medium term direction of the market is still unclear, with either a rise above 1700, or a steeper correction into the mid-1500’s the next likely move.

The day started with a gap down to 1646, quite the opposite of what I was expecting. After a rebound to 1653, the SPX continued lower to 1640.05. A rally was next, as the index rose to 1648, pulled back to 1642, and then rallied to 1654. The SPX then moved lower into the close, dropping to 1647.69 with only a small 4 point bounce along the way.

Going back to the 1687.18 high, the SPX completed a sequence lower at 1635.53. The index then completed sequences higher at 1655.50, lower at 1636.88, and higher once again at 1674.19. Now the SPX has completed a sequence lower at 1640.05. This series of sequences can be seen as the completion of Wave 4 at 1635.53, followed by Waves 1, 2, 3, and 4 at 1635.53-1655.50-1636.88-1674.19-1640.05. This would project a Wave 5 high of 1702-1710.

This series can also be counted as a Wave 1 down to 1635.53, and 3 waves of an inverted corrective wave at 1635.53-1655.50-1636.88-1674.19. Today’s move lower would have completed the first wave of a 5 wave sequence that would eventually become the 4^th wave of that inverted corrective wave. This would indicate a move into the 1500’s. Like everyone else, I am waiting for a break of 1635.53 to indicate a move lower.

On a shorter time scale, we can look at the move off today’s 1640.05 low. It appears that the SPX completed Wave 1 at 1648.38, and was followed by an inverted corrective wave 2 that terminated at 1647.69. This would imply that the market should at least open higher tomorrow. The first target for this wave would be 1659, and the 1665. 1665 would also be the first resistance level set up by the 1674.19-1640.05 decline.

Although the medium term picture is ambiguous, short term I would look for a move to 1659, a small pullback, and a move to 1665.

Thank you.

Tuesday's Market 05/28/2013

The market apparently put aside any bearish sentiments over the long holiday weekend, and began the week on its familiar bullish note.

After finishing last week with back to back gap down opens, it began this one with a gap up open. After initially moving up to 1668, the SPX climbed higher, with barely a pullback until it reached 1674.19. At that point it began to pullback, and continued to pullback, until it reached 1655.03. There the pullback ended, and the SPX rose to 1663 before the close.

It is now apparent that last Thursday’s 1635.53 low was the end of the correction from 1687.18. It appears that the SPX has been forming a nested inverted corrective wave structure since then. Wave 1 ended Thursday at 1655.50. Wave 2 of the 5 wave sequence ended today at 1655.03. Wave A of 2 ended Friday at 1636.88 and Wave B this morning at 1674.19. The pullback from there completed Waves C, D, and E, to finish Wave 2. This rally should now carry the SPX to new all-time highs.

There is near term resistance at 1665. A move into that area, followed by a move below 1655 would likely end this rally.

The more likely scenario is a move above 1665 (another gap up open?), and a continuation of this move. I would look for a move to 1679, and ultimately a move to 1692-1702.

Thank you.