Tuesday's Market 10/06/2015

I’ll apologize in advance for not having a lot of time to get into detail, but considering the moves in the SPX the past few days I wanted to at least update my count. I should have more time in the next couple of days for a more thorough analysis.

From Friday’s low I count 5 waves up to 1935.82. After a short pullback, the SPX appears to have completed another sequence up. It would seem that another complex wave is forming, Which should bring the SPX, at least temporarily, back into the 1935-1921 range I have talked about for the last week or so. There should then be some choppiness in that areas, with a subsequent break below 1921 most probably signaling a strong move to the downside. My downside target remains below 1748.

 

Friday's Market 10/02/2015

At the open it appeared that my first scenario from yesterday was playing out as the SPX tumbled to 1894.17. Once hitting that low the index traded in choppy fashion for an hour as it formed the beginnings of another semi-inverted wave. The SPX then rallied strongly throughout the day, reaching a high of 1951.21.

After the 1927.21 high yesterday, the SPX dropped 26 points before rallying to 1924.52. From there to this morning’s 1894.17 opening low was slightly more than 30 points, but similar to the previous drop. As the index rallied today it became clear that my third scenario from yesterday was more likely. Namely that the SPX would form an inverted wave carrying it above the 1921-1935 level, and then back within that range. Today’s low then looks to be the third wave, with the fourth possibly completing today at 1951.21. Given the 26 point drop of the first wave, and the 30 point drop of the third wave, the fifth wave should be slightly shorter than the first, or slightly less than 26 points. Such a drop would bring the SPX back within the 1921-1935 level. This would complete the inverted wave, and thus the fourth wave from 1935.32. A very small rally would then complete the fifth wave and Wave (D).

Thursday's Market 10/01/2015

Following through on yesterday afternoon’s rally the SPX opened to the upside, reaching 1927.21 before reversing direction. After dropping to 1909.00 the SPX rebounded slightly to 1922.02 before continuing the downward move to 1900.70. That turned out to be the low of the day as the index once again staged an afternoon rally, moving back up to 1924.52.

The opening surge to 1927.21, within the 1921.50-1935.32 range mentioned yesterday looks to have completed the 5 wave sequence from 1880.38 I outlined yesterday. This means that from the 1935.32 high the SPX completed a sequence down to 1880.38, and then a sequence up to 1927.21 that completed today. This can be seen on the 5 Minute Chart. This chart should be viewed as something of a “working copy” simply meant to track sequences, so the labeling will not match up to the other charts. This scenario implies that the SPX should now continue downwards towards my 1748 minimum downside target.

The above scenario is my preferred count, but there are a couple viable alternatives that are worth mentioning. All of these scenarios imply that the current action from the 1880.38 low is corrective in nature, with the only difference being the targeted high of the move.

 

The first alternate counts the move to 1899.48 as the first wave, but then counts the move to 1871.91 as three waves, 1899.48-1880.93-1888.85-1871.91. These can be counted as waves A, B. and C of an inverted corrective wave. The rally to 1916.60 would be wave D, and the decline to 1897.05 wave E to complete the second wave from the 1871.91 low. The third wave would have ended today at 1927.21, and the fourth today at 1900.70, with the fifth in progress. The target for this wave would be 1930-1935.

For the second alternate I need to start from last Friday’s 1921.50 low. The rise to 1935.32 would then be counted as Wave A of an ongoing semi-inverted corrective wave. The 1880.38 low would be Wave B, and Wave C would have completed today at 1927.21. Wave A of D would be today’s 1900.70 low, with Wave B of D likely taking the SPX above 1935, so that Waves C, D, and E of D could carry the index back into the 1935.32-1921.50 range. Wave E would then complete slightly above 1935.32. In rare cases these waves can take on slightly different forms which may result in the SPX moving higher than anticipated.

 

So the most likely scenario is that the corrective wave completed today at 1927.21, but there is a possibility of the SPX moving slightly higher without affecting my longer term 1748 target level to the downside.