As I have mentioned in several
previous posts, I view last September’s 2019.26 high as the completion of a 5
wave sequence from October 2011 low of 1074.77. Since that point the SPX has
been forming a series of semi-inverted corrective waves that eventually should
terminate with the index below 1725. In a rising market these waves are
characterized by a move lower, a false breakout above the previous high, and
then a move below the initial low. Looking at the daily SPX chart from the
2019.26 high, one can see a series of such moves. After forming a series of A
and B waves, the SPX now seems to be completing those sequences.
Again looking at the daily SPX
chart from the 2019.26 high, the index formed a series of A and B waves, with
the last noted one being Wave (b) in yellow at 2125.92. The SPX completed Wave
(c) at 2056.32 and Wave (d) at 2105.35. I had been looking for Wave (e) to then
test the 1980 low with 1995 as a target. This would also complete Wave [c] in
green. The SPX did complete a 5 wave sequence at 1993.27. Obviously the selling
did not end there. After a small rebound to 2009.47 the SPX continued to fall
to 1867.01. This was followed by three waves higher to 1954.09, and then
another move lower to 1879.98.
Assuming that Wave [c] in green did
complete at 1993.27, the next 5 waves, 1993.27-2009.47-1867.01-1932.14-1904.52-1954.09
would complete a 5 wave sequence for Wave [d], and the subsequent move to
1879.98 Wave [e]. This is rather difficult to see on the Daily chart, so I have
also added a 30 Minute chart for clarity.
At this point I have added one
alternate count that does not change the ultimate target, but just seems a more
likely way to get there. After the high at 2079.46 ((B) Blue), I have been
counting the next two waves, 1972.56 and 2093.55, as another A-B. The alternate
has the move to 1972.56 as Wave (C) in blue and the move to 2093.55 as a Wave
A. Looking at this count, yesterday’s 1879.98 low would complete Wave B in light
blue, a Wave C higher would be the next move. Given the completed waves, and my
target of 1725, the most likely scenario would be a three wave rally to
complete Waves C, D, and E, which would also complete Wave (D) in blue. A rally
to 1980 would then give a target of 1725 for the final Wave (E), completing the
correction from 2019.26.
Given the current count, I would
expect a rally to 1980, followed by another move lower to below 1725 to
complete this correction. Just as there is a price relationship between waves,
so to is there a time relationship. The Weekly SPX chart shows that this
current move is Wave [E] in purple of an inverted corrective wave from 1219.80.
The time relationship suggests the earliest that this move would conclude is
the first week of October.
On a short term time frame, the SPX
looks to have completed a 5 wave sequence higher today at 1948.04. The index
then moved lower, below the 1879.98 Wave [e] low. Since a rally is expected,
this looks to be another semi-inverted wave forming, this time to the upside.
