Tuesday's Market 04/30.2013

The SPX traded on both sides of unchanged at the open, coming off yesterday’s strong move to the upside. Soon the market moved lower, dropping to 1586.50. At that point the rally once again took hold, with the SPX rising to 1592. After some choppy upside movement, the SPX rose to 1596.78 before pulling back. This pullback held at 1593.56, and the market mode one more move higher, to an all-time high of 1597.38.

After the opening pullback to 1586.50, the SPX appears to have risen to a wave 1 at 1592, followed by a corrective wave 2 sequence. Wave 3 occurred at 1596.78, followed by wave 4 at 1593.56, and wave 5 at 1597.38. This sequence may have completed a 5 Wave sequence from 1536.03, which may signal the long awaited end of Wave D. This sequence can be seen as 1536.03-1592.64-1577.56-1596.65-1586.50-1597.38.

With the market action of today, it seems that the SPX is still in, or has just completed Wave D from 1292.66. The other scenarios I mentioned yesterday would seem to be lower probabilities at this point. I am not ready to declare Wave D over. This market has risen in spite of itself, and may continue to do so. I can however make some statements about what I am looking for.

First, if Wave D is to continue, it will have to do so via a complex corrective wave. This would be similar to what we saw between Friday afternoon, and Monday morning; a small dip, followed by a sharp move to clear the 1598-1602 resistance area, and then choppier trading completing the complex corrective wave, and the next 5 wave sequence. I see 1590 as the first support level, so that seems like a logical limit to the pullback.

It is more probable that Wave D ended at 1597.38, with Wave E expected to follow. Since Wave D has now exceeded Wave B, I would expect Wave E to be less than the 61 point decline we saw for Wave C. This wave should end somewhere between 1582, and 1536, with a target of 1573.

Thank you.

Monday's Market 04/29/2013

Apparently the market did not like my suggestion of 1566 for the next price level. It seems I was correct about the length of the next move, just a bit off on the direction.

The market gapped up at the open again today, hitting 1588 before pulling back. The move above Friday afternoon’s high signaled an inverted corrective wave was in progress, and that is what occurred. After the pullback the SPX rose again to 1592, pulled back, moved higher to 1595, pulled back, and then hit the high of the day at 1596.65. The market then fell into the close.

The SPX completed a 5 Wave sequence from 1577.56 at today’s high, which now gives us three sequences completed from the 1536.03 low, 1536.03-1592.64-1577.56-1596.65. This, I believe, puts the market in a precarious position. My current count has the current wave from 1536 as Wave D of an inverted corrective wave from 1292.66 October 2011 high. After this wave terminates, I would expect one more move lower before the market continues higher. If this count is correct, a move to 1598 would complete the sequence from 1536, and possibly be the start of Wave E to the downside. Since Wave D would complete beyond Wave C, I would expect Wave E to be less than the 61 point move from 1597 to 1536.

There are a number of possibilities if the market moves up to 1598-1602 and then moves lower. All of these would indicate a move lower, so I will not go into all the details. If the SPX breaks above 1602, it would appear the market will see higher prices before Wave E begins.

The real problem, as I see it, is if the market moves below 1577.56 without making a new high. This would most likely mean that Waves C, D, and E complete at 1536, with the current 3 waves from that low being Waves 3, 4, and 5 from 1074. Looking at it another way, it would mean the entire wave sequence from that point would be complete, and should now be followed minimally by Waves C, D, and E  from May 2011 1370.58 high. Waves 3, 4, and 5 would then complete an entire sequence from 666.79.

This would mean a larger correction than the less than 61 point move in the first scenario, but still most likely within expectations. There is one possible count however, that would indicate the start of a major correction from today’s high.

I will not get too far ahead of myself, so I will take this one step at a time. For now, a move to 1598, followed by a pullback would probably indicate a minor, less than 61 point correction. A move above 1602 and we should see higher prices before the current wave completes. A move below 1577, without making a new high, would most likely mean a larger correction is underway.

Thank you.

Friday's Market 04/26/2013

The market opened flat today, meandered lower, and then rallied to 1586. When that rally fizzled, the SPX continued the move lower from the 1592 high. The SPX completed a 5 Wave sequence from that high at 1579.62, and then continued lower, completing a larger degree sequence from that high at 1577.56. At that point the market staged a pretty good rally, rising to 1585.68, where it completed a sequence from the short term low, and then moved lower into the close.

The 1592.64 high marked the termination point of a 5 Wave sequence off the 1536.03 low. From that point, the SPX has now completed a sequence to the downside, followed by a sequence higher. It is still unclear as to whether this is the start of the next move lower, which take out the 1536 low, or a corrective wave indicating another move above 1597. Short term, I think the next move is lower, with a target of 1566. I will provide a more detailed update over the weekend.

Thank you.