Thursday's Market 03/19/2020

A little pressed for time tonight, so I'll try to hit the highlights. The trading was a little choppier today than we have seen lately. For the most part the SPX continued the small rally from yesterday's 2380.52 low. But in interesting fashion. I count a 5 wave sequence from that low to 2431.03. Appears to be a complex corrective wave from 2431.03 to 2385.83, then another 5 wave sequence from there to the day's high of 2466.97. In other words three waves from yesterday's low to today's high. I would expect the wave to unfold in 5 waves, which opens up some interesting possibilities. Either this move higher ha not completed, or yesterday's low was but a first wave instead of all of Wave 3 from the 3393.52 high. Or potentially more downside to come.

For now we'll keep an eye on the levels mentioned yesterday:

A move above 2553.93 would likely mean at least a short term bottom is in.

Adjusting for today's move higher, support for a final wave of this move becomes 2290-2135. So a move below 2135 would mean there is more work to be done to the downside. If the SPX moves into the 2290-2135 range, 2466.97 becomes the level to look for a move higher.

To expand on the three waves up from today. If that holds true, the diagonal on the chart would likely be broken to the downside. Thinking in terms of the down waves I spoke of the other day, it means today's high would be the completion of 4 of 9 waves.

Market Update 03/18/2020

The SPX opened lower again this morning, dropping to 2385.34 before attempting to rally. That attempt took the index back up to 2453.57 before resuming the march lower to 2280.52, which proved to be the low of the day. From there the index staged a more robust rally through the afternoon, moving up to 2409.81 just before the close. This one again brought the SPX into overbought territory on the 15 minute chart. The low of 2280.52 is notable also, reaching the bottom trend line of what appears to be a triangle, which I, and several others have noted. That is the point where it staged the afternoon rally. It also brought the index into the zone that would complete a 5 wave sequence for the alternate count I talked about yesterday. So an area watch.

But for now I will still go with my primary count. In yesterday's post I stated that count would require the SPX to complete the final 3 waves before completing. With the action today, it os possible the SPX completed 2 of those waves with the move lower to 2280.52, and the afternoon rally back to 2409.81. With the SPX hitting overbought on the 15 minute chart at the close, 2409.81 may be the end of that wave. If so, and with just one wave to complete, it allows us to give some targets to look for. if my count is correct, and 2409.81 was the completion of a wave, the final wave projects to the 2254-2087 range. Not quite hitting 2030, but within that target range.

So as always a few caveats. One of the useful aspects of my model is giving specific ranges for targets, so it helps to clarify where to look, and gives you a specific point where you know something else is going on. So what to look for today:

If the SPX does not take out today's 2280.52 low, and moves above yesterday's 2553.93 high, it would be highly likely that my alternate cunt was in play, and the index might be in for a move higher.

If the the SPX moves into the 2254-2087 range, and then takes out the 2409.81 high from today, my primary count would be in play, and that would likely complete a 5 wave sequence from 3393.52.

If the SPX falls below 2087, it would mean that today's 2280.52 low was not the end of the 7th wave, but only a part of it. Which means the index would potentially have more downside.

And now, if nobody minds, I'd like to add a few personal words. So those interested only in the analysis can stop there.

First I'd like to thank Lunker for maintaining his blog. It can be a lot of work, and takes a lot of time, and I know I'm not the only one who appreciates the effort.

Secondly I'd like to thank those who have had kind words, and have shown interest in my work. It is more than greatly appreciated.

I started working on what has turned into my 5 Wave Model over 10 years ago. Similar in ways to Elliott Wave, but quite different in many respects also. So when I began developing the model, I started looking at Elliott Wave blogs because they were the closest thing to my work.At some point I stumbled across The Elliott Wave Lives On, by Tony Caldaro. For many  years I found it fun and enjoyable to share my work, and exchange ideas with others. For several reasons, which aren't important here, I decided to stop posting there, and stopped working on my own blog posts. I still followed to blog, mainly because of the respect I came to have for Tony, and his methods. One of the things that struck me about Tony was his commitment to sharing his ideas, and his belief that we owed it to others to pass on knowledge. That it was our responsibility. I was always amazed at his tolerance for people who were unkind in their words to him. Made me respect him more. I, along with many others, was saddened by his passing. But it also made me think about some things, and motivated me to start sharing my ideas again. I in no way want to compare myself, or my ideas to Tony's and his, but rather take some of philosophies to heart.

So my purpose here is simply to share my ideas. If you find value in them, use them, if you think it's a garbage, feel free to disregard them. I have tried to for over a decade, but it works. But it is not the magic bullet. Like every other method, it works wonderfully at times, and fails miserably at others. It is a tool that I hope some can add to their box and find useful.

I do not give financial advice. I do not give trading advice. I am not a trader. I trade, but I'm not a trader. I do not have a multi-million dollar trading account that I can take screen shots of. I am not perfect. My model is not perfect. My interpretations are not perfect. This is not my job. I have a different job. So sometimes my posts will be late at night, sometimes short, sometimes not there. But I will do my best to at least give a short update as much as I can. Some posts will be more detailed than others. As this is my own model, I will try to explain the terminology, and thought process the best I can. Feel free to ask questions if you'd like. I will answer as best I can.

So, again, I am simply here to share my ideas. It is a work in progress, so I will add things as I can. My sincere thanks again for the interest.

Market Update 03/17/2020

Yesterday I talked about the possibility of Monday's 2380.94 low being the end of Wave D, with the likelihood of the SPX following that with a rally into the 2537-2666 zone.

The index did open sightly higher, making it to 2463.54 before reversing course, and falling slightly below Monday's low to 2367.04. The SPX quickly ran up to 2553.93 by midday. The move to a slightly lower low did change the resistance zone to an extent, but not significantly. 2553.93 put the index right within the 2537-2666 resistance zone I spoke of. Once hitting that zone the index pulled back to 2448.00, and then spent the rest of the afternoon trading between those two numbers.

So where does this leave us in my count? From the 3393.52 high, I am counting 2880.89 as Wave 1 of a five wave sequence. The SPX, in my view, has been forming an inverted corrective wave from that point, with 3136.72 being Wave A. Wave B ended at 2478.86, and the rally to 2710.89 as Wave C. Today's low of 2367.04 would be Wave D, and the subsequent rally to 2553.93 Wave E, completing Wave 2.

I realize that most people are not familiar with my terminology, so I will try to simplify it here, hopefully making where we are in my count clearer. The easiest way to think of it, would be to see each wave in my model as breaking down into 9 identifiable waves. There are a number of reasons why I label the waves as I do, with the main one being the relationships between waves. For those familiar with Elliott Wave counts, you can think of it as being a 1-2-1-2-3-4-3-4-5 sequence, which is 9 waves. In my model that would be labeled as 1-A-B-C-D-E(2)-3-4-5, with the A-B-C-D-E portion being what I call inverted corrective waves. So, 1-2-3-4-5-6-7-8-9, equates to 1-2-1-2-3-4-3-4-5 in Elliott Wave, which equates to 1-A-B-C-D-E(2)-3-4-5, in my 5 Wave Model. I count 5 wave sequences in both impulsive and corrective waves, so I won't equate it with Elliott Wave corrective counts. Obviously there are numerous variations for all of these, but that would be the simplest way to look at it. There are also many differences between my 5 Wave Model, and Elliot Wave, so this is only equating count sequences between the two for clarity.

So given that, if Wave E(2) completed today at 2553.93, it means the SPX has completed 6 of the 9 waves, with 7-8-9 to follow. I am currently still expecting this sequence to complete at my 2030 target level. The past few days I have been considering other possibilities, such as the SPX putting in a shorter term low, and undergoing a short term rally before moving down to 2030. That is still possible, but normally if that were to happen, it would occur either as "B" or "D" waves of the inverted corrective wave, or a smaller magnitude sequence would occurred.

Another reason for that conclusion is the relationships that form between waves. The 2030 target was based on the relationship between the 666.79 low, the 3393.52 high, and the intervening waves. The conclusion of this sequence will depend on the relationship between the first, third, and fifth waves of this sequence. But with Wave E(2) possibly completing today, I was able to look at several secondary relationships, and one of them confirms the 2030 number.

But I don't want to get too far ahead of myself. Let's stick to what we know. It does appear that today's low of 2367.04 was Wave D. But Wave E has not been confirmed yet, so a move above the resistance zone I mentioned yesterday would still negate this count.I will adjust the upper bound of that level to 2653 to take into account the new low. I also mentioned yesterday a possible alternate count. That is still a possibility, so if 2553.93 proves to be Wave E, the sequence from 3393.52 could complete under 2400, so a slightly lower low than today and rebound could bring this into play. Especially if we bounce off the bottom trend line, which looks to be around 2300.

Market Update 03/16/2020

Just wanted to spend a few minutes updating my count after today's action. With any luck I'll have more time to go in depth tomorrow.

I mentioned yesterday that Friday's 2710.89 high likely completed Wave C of a corrective sequence, and that a move lower was likely. The SPX did open substantially lower this morning, hitting 2401.57. From there the index moved higher. That rally attempt failed, and the SPX closed near the low of the day of 2380.94.

That low took the index into oversold territory, and continuing my count, that would be Wave D of the corrective wave. If so, the SPX should rally off this low. As I have mentioned the first, third, and fifth wave of each sequence develop a specific relationship. With this being the fifth wave of the sequence, I can project a target for this wave. Assuming my count is correct, this wave should terminate between 2537 and 2666 on the SPX. At the termination of this wave, the SPX should once again move lower. So what I would be looking for is the SPX to move into the 2537-2666 range, and hit an overbought reading on the hourly RSI. A move above 2666 would indicate an alternate count, and the SPX would likely continue to rally.

There is a possible count that would make today's 2380.94 low the completion of a 5 wave sequence lower, and possibly at least a short term bottom.

Another Wave Down?

Last night I reviewed the long term SPX chart, and gave a target of 2030 on the downside. Tonight I'll analyze the shorter term outlook with the Hourly chart. From the 3393.52 high, the SPX formed a 5 wave sequence that terminated at 2880.89. The first wave took the SPX to 3214.65, Wave 2 at 3253.58, and Wave 3 at 3118.77. From there the SPX formed an inverted corrective wave for Wave 4. Normally either wave 2 or wave 4 forms one of these waves. In a normal sequence there is a relationship that develops between the impulsive waves 1, 3, and 5. In an inverted corrective sequence, the relationship is still between the first, third, and fifth waves, but these waves are counter trend waves. So Wave 4 went 3118.77-3182.51-3007.06-3097.07-2855.84-2959.72. One more move down to 2880.89 completed the fifth wave, and the sequence.

The SPX at this point took a bit of a breather, and managed a small rally to 3136.72. At the moment I am counting 2880.89 as Wave 1. This small rally I would count as Wave A of the inverted corrective wave that normally occurs. Wave 2 is the most likely spot for this.

From 3136.72, the SPX started another wave down. First came some very quick waves for 1, 2, and 3. 3136.72-3026.92-3081.65-2976.63. Wave 4 started with a move up to 3130.97, and then the bulk of the damage occurred in waves b, and d of this inverted corrective wave, as is normally the case. One more small move to 2478.86 completed wave 5, and the sequence.

So visually, looking at waves 1, 3, and 5 of both sequences, you will notice the relationship. In the first sequence from 3393.52 to 2880.88 each consecutive wave gets smaller. In the second, from 3136.72 to 2478.86, each consecutive wave increases. There is a mathematical component I use to objectify the relationship, but it visually notable. You will observe the same relationships between waves A, C, and E of the corrective sequences.

Once the market found a short term bottom at 2478.86, the SPX again attempted a rally which took it to 2710.89 on Friday. A couple of things to notice with this wave. First, it took it into overbought territory. Secondly, since we counted the first nominal rally from 2880.89 to 3136.72 as a Wave A, I would expect this wave, as a Wave C, to be similar in magnitude to Wave A. Wave A was just under 256 points, and this rally was just over 232 points. Fairly similar.

Given those two things, it seems likely that the 3136.72 was the end of Wave C, and the SPX should again move down for Wave D. These inverted corrective waves can take on many forms, so I'll be keeping a close eye on the market action from here.

5 Wave Model 03/15/2020

It has been way too long since I have posted. To those who have followed in the past, I apologize. But, considering the state of the market at the moment, I have contemplated starting to post again. Since it has been so long, I will spend a few minutes catching up. Those who have followed in the past know that I have been looking for 5 waves to be completed from the 3/6/2009 low of 666.79. I saw 1219.80, which was reached on 4/30/2010 as the first wave. The following correction to 1010.91 I considered Wave A of a 5 wave corrective wave. The subsequent high on 5/5/20111 of 1370.58 was Wave B of this corrective wave, and the low of 1074.77 Wave C. The market then underwent a lengthy rally that carried the SPX to 2134.71 on 5/22/2015. The market action from 9/22/2014, with the SPX at 2019.26, until 216/2016, when the SPX fell to 1820.66, was a bit muddled. At the time the SPX rose to 2134.71, I was looking for a low below 1810 to complete Wave C of the corrective wave from the 1219.80 high. There a couple of possible counts for this, but at the moment it is moot, since the count remains the same regardless of the exact points. So I will go with 2019.26 completing a 5 wave sequence from the 1074.77 low, and then an extension of that wave to 2116.48 on 11/6/15. Taking that as Wave D of the 5 wave correction from 1219.80, the following low of 1810.10 meets my requirements for the completion of 5 wave from 1219.80.

So we have this entire wave starting at 666.79, Wave I completing at 1219.80, and a 5 wave corrective sequence completing at 1810.10, for Wave II. Considering that, my model would be looking for Waves III. IV, and V to follow. I counted a 5 wave sequence from that 1810.10 low, to 2872.87, thus possibly completing Wave III. I saw a complex corrective wave from there to 2346.58 low reached on 12/31.2018. This completed Wave IV. The SPX then rallied to 2393.52 on 2/25/2020.

So if you take the 5 waves 666.79, 1219.80, 1810.10, 2872.87, 2346.58, 3393.52, who find a correlation of .9925, which meets my model's requirements for the completion of a 5 wave sequence. If so, the target for this corrective wave would be around 2030.

I will continue to post, depending on interest.

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).