Wednesday's Market

The market moved sharply lower at the outset today, dropping to 1397 in the opening minutes, and continuing the fall from yesterday’s 1415 high. Here the market found some support, and rallied slightly back to 1399. This bounce was short-lived however, and the SPX soon resumed its decline, falling to 1393.92. This wiped out the entire advance from yesterday, right at the 1394 level we suggested. With the 5 wave sequence from 1415 completed, the market could now move higher.

The SPX first advanced to 1400, dropped to 1398, then moved to 1402. After falling back to 1399, the market staged one final move to higher ground, where it reached 1403.39.This completed the sequence, again hitting the level we pointed to yesterday as the corrective limit from 1394.

There is a possibility that 1403 was only wave 1 of an advance from 1394. If this turns out to be the case, wave 5 is only projected to terminate slightly above the 1403 level, and still within our projection from 1394.

At this point, look for a move below 1399 to confirm the 1403-1404 sequence high. A move below 1394 from there would signal a further move down, with 1385 a likely stopping point. Should the market move above 1403-1404 from current levels, we would look for higher prices, and a possible new high.

We still believe the bias of this market is to the downside, and still expect a break of the 1357 low.

Decision Time?

The SPX opened lower today, quickly moving down to 1397. After a weak attempt at a rally, the market fell further to 1393.96, right at our 1394 projection from yesterday. From there the market found support, and has been moving up ever since.

We targeted the 1404 level as the point where the SPX would run into resistance, and the market seems to be right on track for that level. A 5 wave sequence from 1393.96 is unfolding, and should top right around that 1404 level.

The critical points for the market would then become 1394, with a break below this level signaling another move lower, with 1385 being the level of support, and the 1404 high, which if surpassed could mean new near term highs.

Tuesday's Market

We were expecting the market to move lower today, with Monday’s 1406 high marking the termination of a 5 wave sequence from 1357. Instead we got the complete opposite, with the market moving decidedly higher.

The SPX rose back to near 1400 in the opening minutes of trading, and then started moving lower. At 1396 it abruptly reversed course, and rose virtually uninterrupted until it reached 1415 at midday. That turned out to be the high of the day, moving steadily lower, closing near the move’s low of 1405.25.

This move appeared to have some conviction to it, but we have seen that same conviction, in both directions, ever since that 1357 low. One day the market seems almost certain to breakout in one direction or another, but ultimately failing to do so. This time things may be different of course, but we are not willing to join the bullish camp just yet. The market acted today like it wanted to break out to new highs, and some of our scenarios account for that, but until we actually break into new ground, our current scenario remains intact.

With our current count from 1357, 1415 still falls within our target range for wave 5. We would now label the 5 wave sequence from 1384.78 as, 1384.78-1393.32, 1393.32-1390.12, 1390.12-1404.64, 1404.64-1394.00, and 1394.00-1415.32. Wave 4 appears to have been a semi-inverted corrective wave. This sequence yields a model value of .9945.

The count from 1357.38 would be 1357.38-1388.13, 1388.13-1358.79, 1358.79-1390.81, 1390.81-1384.78, and 1384.78-1415.32, which yields a model value of .9981. This also fits our projections for waves 1 and 2 from the 1422 high. Given this, we still believe we can make new lows, even with Tuesday’s action.

Should we move to new high ground, a scenario involving an inverted, or semi-inverted corrective wave would come into play. Having completed a 5 wave sequence from 1422, and three 5 wave sequences from 1378(1340, 1422, and 1357), both of those scenarios are possible.

In the near term, we expect the market to move lower, possibly down to 1394, before moving back up to 1405. After that we will be watching breaks of the 1385, and 1357 levels to signal moves lower. Should we move above 1415, the market bias would be to the upside, possibly moving to much higher levels.