Thursday's Market 04/11/2013

Although the market moved higher again today, it was a much choppier trading session than yesterday. Along the way, there were a number of interesting wave formations, and left open a slight possibility that a 5 Wave sequence has completed from 1540.29.

The market opened slightly lower, falling to 1586.17 before resuming yesterday’s strong rally. From that point it looked like a continuation from yesterday, as the SPX rose to a high of 1597.35, with the largest dip being less than two points. Just when it looked like the market was going to attempt to break 1600, it began to sell off. It quickly fell to 1592, and then came a series of oscillations with slightly lower highs, and slightly lower lows. From 1592 the SPX went to 1596.75, 1591.43, 1595.63, and finally 1591.05. The market then rose slightly into the close.

The rise from 1585.33 to 1597.35 contained 5 distinct 5 wave sequences, 1585.33-1589.07-1586.17-1592.32-1590.63-1597.35. However these individual sequences did not complete a 5 Wave sequence, as the correlation for this is only .9378, well below my model’s threshold value. This indicated a more complex wave structure was underway, and indeed I believe that is what happened. It appears the market is forming a nested inverted corrective wave structure that should carry the market higher. This structure contains a wave 1 up, a wave 1 down to initiate the inverted corrective wave, another wave 1 up, followed by another wave 1 down to start a second inverted corrective wave. I will spare everyone the gory details of how this wave unfolded. The result was the second inverted corrective wave terminated at 1592.44, and the second 5 wave structure completed at 1596.75. The first inverted corrective wave carried the market back down to 1591.05, which leaves us with one 5 Wave sequence to complete. 

If 1591.05 is Wave 2 of this sequence, I would expect a move above 1597 for Wave 3, a slight pullback, and then Wave 5 near 1605. It was correctly pointed out to me yesterday that I made a calculation error. I said the sequence from 1567.97 would complete as 1599-1597-1621. It should have read 1605-1599-1621. I apologize for the error.

When the current sequence from 1567.97 completes at 1605, it will complete Wave 3 from that point. I would expect a small correction to 1599, and then a final push to 1621 to complete the 5 Wave sequence from 1538.57. At that point I would expect a correction, possibly to 1551, before one more rise to slightly higher levels to complete the sequence from 666.79.

I mentioned at the start that there is a slight possibility of a 5 Wave sequence having completed from 1540.29. I counted the move from 1540.29 to 1573.89 as a 5 Wave sequence. The move then from 1567.97-1586.39 completed another sequence, which I see as one degree less than the first, followed by an inverted corrective wave to 1585.33. Putting the sequence together from 1540.29 to today’s high gives us 1540.29-1573.89-1567.97-1586.39-1585.33-1597.35. This sequence has a correlation of .9913, within my model’s threshold. However, as I described above, I do not see the move from 1585.33 to 1597.35 as a complete 5 Wave sequence. If it is not, a sequence from 1540.29 cannot be completed. It is possible that I have misread the wave, and since the sequence from 1540.29 to 1597.35 does fall within my model’s parameters, it needs to be considered as a possibility. If the market falls below 1585.33, this will be the likely scenario, with a target around 1551.

Thank you.

Wednesday's Market 04/10/2013

WOW! What a day for the market. As anticipated, the slight pullback into the close yesterday, proved to be the low. The market started strong, and remained strong throughout the day.

Another gap to the upside took the market to 1576.10 at the open, followed by a two point pullback. That was only the beginning, as the market continued higher, and higher, until it reached 1586.39. This move higher was only interrupted by a couple of small pullbacks. One more pullback set the stage for the final push of the day, which brought the SPX to 1588.85. From there the market saw its most substantial drop of the day, plummeting nearly three and a half points to 1585.33. The market recovered at that point and rose nearly to its previous high before the close.

The first 5 Wave sequence of the day was a familiar wave, with an inverted corrective wave 2. This completed as the market hit 1586.39. From there, the market turned a little choppy, eventually wending its way to 1585.33. This was itself a corrective wave 2 from the 1586.39 high. 

Looking at this entire wave sequence from 1538.57, the market as now completed four waves, and Waves 1, and 2 of Wave 5. Wave 1 was the rise from 1538.57 to 1564.91 on 3/25/2013. Wave 2 was then the semi-inverted corrective wave that stretched from 1564.91 to 1540.29. Wave 3 went from that low, to yesterday’s 1573.89 high. Wave 4 then completed at yesterday afternoon’s low of 1567.97.

Today the market completed Wave 1, and Wave 2 of 5 at 1586.39, and 1585.33 respectively. Waves 3, 4, and 5 of 5 should lead to the end of this sequence. With more waves completed, it is now likely that this wave will carry slightly higher than the 1619 I had previously mentioned. The SPX should now top over 1621.

A likely path for these final waves would be something like 1599-1597-1621. After this wave completes, the market should finally be ready for a correction.

Thank you.

Tuesday's Market 04/09/2013

It turned out to be quite an interesting day. I have been talking about this “semi-inverted corrective wave” scenario since this weekend, and the market seems to be playing out that scenario thus far. The market also gave us a perfect example of a semi-inverted corrective wave today, which I will try to describe in detail. This may make my scenario from 1538.57 easier to understand.

The market opened higher today, hitting 1566.51. After that, the market turned lower, dropping to 1560.92. The market then turned higher, rising to 1565.99, once again hitting that 1565 resistance level that has proved so stubborn. That level held once again, dropping the SPX to 1561.38, before it once again moved higher. The market soon ran into that 1565 level for the third time, but this time it wouldn't hold. After a slight pullback, the market finally broke through that level, and it was up, up, and away. The market quickly ran up to 1573.89, with only small pullbacks along the way. Yesterday I mentioned the 1572 as a likely stopping point, and that level was pretty much on target. The market then fell on cue, falling to 1567.97 near the close.

The up and down movement at the start of trading was the unraveling of yesterday’s Wave 5(Blue) high. When the market hit 1560.92, that wave was completed, and so was Wave 4(Purple) from 1540.29 low. After rising to 1564.30, the market completed Wave 1(Blue) of the next sequence. Wave 2 was the semi-inverted corrective wave I mentioned earlier. This wave ended at 1561.38. The strong upside move from that point completed Waves 3, 4, and 5 (Blue) of that sequence.

This completed a 5 Wave sequence (Purple) from the 1540.29 low and most likely Wave 3 from 1538.57. A 5 Wave sequence then completed to the downside, terminating at 1567.97, which I believe is the end of Wave 4 from 1538.57, which leaves us with Wave 5, and a target of 1619.

As promised, I will try to break down the semi-inverted corrective wave that occurred today. The 5 Wave sequence began at 1560.92, with Wave 1 ending at 1564.30. This is the blue “1”. You will then see a 5 Wave sequence in white that ends at 1561.38. This is the semi-inverted corrective wave. These waves start with a small corrective move for Wave 1, then Wave 2 moves beyond the higher degree Wave 1, which in this case is the blue “1”. Waves 3 and 4 complete within the boundaries of the blue “1”, and the white “1”. Wave 5 then completes the sequence, and Wave 2 of the higher degree wave, or Wave 2 (Blue).

After a semi-inverted corrective Wave 2, Waves 3, 4, and 5 play out in a fairly predictable pattern. Wave 3 usually ends close to Wave 2 of the semi-inverted corrective wave. In this case blue Wave 3 ended at 1565.76, just below white Wave 2, which was 1565.99. Wave 4 is then usually quite shallow, in this case just over a point, and Wave 5 can be projected using the Wave 1 of 1, and Wave 2 of 2 (white) as reference points. In this case Wave 1 of 1 (Blue) was 1562.40. I then take the points (1560.92, 1562.40), (1562.40, 1565.99), and (1565.99, X), where X is the termination point of Wave 5 (Blue). I then find the value of X, for which the resultant correlation is 1. The number that solves the equation for this example is about 1574.82, very close to the eventual Wave 5 (Blue) high of 1573.89. This is the same relationship I used in yesterday’s example, and the way I can project the Wave 5 high from 1538.57.

The 15 Minute chart shows the entire current wave structure. Wave 1 of this sequence came in at 1564.91, and is the red “1”. Wave 2 (Red) is then the entire move from 1564.91 to 1540.29. This is the semi-inverted corrective wave. I believe Wave 3 (Red) ended today at 1573.89. This is very close to the Wave 2 of 2 high 1573.66, very similar to both examples I have given. The short pullback to 1567.97 is then most likely Wave 4 (Red). Again, in both previous examples Wave 4 was very shallow. Wave 5 is then usually a pretty dramatic move. Again, my target is 1619.

Thank you.

Monday's Market 04/08/2013

The rally continued today off Friday’s low, closing the gap down opening. If the count I discussed in my Weekend Outlook is correct, we should see the market rise higher here, before a pullback.

With the completion of a 5 Wave sequence off the 1540.269 low just before Friday’s close, it was not surprising to see the market open slightly lower today. The market dropped to 1548.63 this morning, before resuming Friday’s rally. The market rose to the 1552-1553 area, where it encountered some resistance. After bouncing in a narrow range for a couple of hours, the market finally cleared that level. Once it did, the rally resumed in earnest. The market quickly rose to 1558.65, and after a small pullback, reached 1562.79.

From Friday’s 1540.29 low, the market now appears to have completed 3 Waves . Wave 1 completed at 1554.66, with the pullback to 1548.63 a second wave. The third wave most likely completed near today’s close at either 1562.25, or 1562.79. If it completed at 1562.25, the very minor pullback to 1561.97 could be a fourth wave. This would give a projection for Wave 5 somewhere above 1572.

That would most likely be the completion of Wave 3 from 1538.57 low. This would fit very well with a projection of 1619 for Wave 5 from that low, as I discussed over the weekend. If the market pulls back at the open, I would expect support near 1556. This would be about the same point drop as the move from 1554.66 to 1548.63, and could mean the SPX is forming an inverted corrective Wave 2 from 1554.66. Either way, the market should reach 1568-1572 to complete Wave 4.

Thank you.

Weekend Outlook 04/07/2013

I apologize for the lateness of this Weekend Outlook. I had some prior obligations that kept me from away until now. However, that time did give me time to ruminate about the market action of last week.

I will confine most of this post to the move from 1538.57. After reviewing my charts this weekend, I believe I have finally reconciled the issues I have had with my count from that point. Interestingly, Friday’s plunge to within two points of that low was the key. It reminded me of a similar point in the market that occurred in April-May of last year.

On Friday, 4/20/12, the market closed at 1378.53. From a recent 1357.38 low, the market had trended higher in choppy trading. On the following Monday, the market dropped nearly twenty points, to within two points of the 1357.38 low. At the time, most people were looking for the market to continue the decline, but instead the market quickly rose to 1415.32. That nearly twenty point plunge turned out to be Wave 5 of an inverted corrective wave.

Given the above scenario, the action from the 1538.57 low started to look quite familiar. Upon further examination, it appears that I missed a couple of waves. The first error was during the initial uptrend to 1561.56. I had originally counted that as a single 5 Wave sequence, but would now suggest that it was actually Waves 1, 2, and 3 of a sequence. That sequence then completed at 1564.91. Thus we have 1538.57-1550.46-1544.02-1561.56-1545.90-1564.91.

The second error I mentioned last week. That is, the move from 1546.22 to 1573.66 was a 5 Wave sequence. This sequence was 1546.22-1563.95-1551.90-1568.30-1558.47-1573.66. Wave 4 was another example of a semi-inverted corrective wave. The decline from 1573.66 to 1540.29 then completed Waves 3, 4, and 5 of a semi-inverted corrective wave from the 1564.91 high.

I still see 1538.57 as the completion of a 5 Wave inverted corrective wave from 1370.58, and Wave 2 from 666.79. This would mean that the market has now completed Waves 1, and 2 of Wave 3 from 666.79.

Looking back at the first example, Wave 1 of 1 completed at 1374.71, while Wave 2 of 2 completed at 1392.76. The correlation between these wave points, and the ultimate high of 1415.32 was .9973. That is, using the points (1357.38, 1374.71), (1374.71, 1392.76), and (1392.76, 1415.32), yields that correlation coefficient. Applying the same relationship to the current wave, gives a target of 1619.00.

If this count is correct, the market should not move below 1538.57 anytime soon. If this sequence ends at 1582.50, there should be a correction, and then another move higher to complete Wave 5 from 666.76.

Thank you.

Friday's Market 04/05/2013

In hindsight, I should have kept my thoughts to myself yesterday, and stayed with my unorthodox call on Wednesday of a 5 Wave sequence from 1538.57 being completed at 1564.86. This would be Wave 3 from 666.79. The action of the market today, in particular the move below 1545.90, confirmed at minimum that a 5 wave sequence from that low had completed.

The SPX also broke below 1547; the level I mentioned yesterday as indicating a downtrend was most likely underway. That downtrend may indeed have started, but the fact that the market remained above 1538.57 may mean there is one more surprise in store.

 

If you look at the 3 Minute chart, you will see that from the 1564.86 high, the market completed a 5 wave Sequence down to 1549.80, a 5 Wave sequence up to 1562.60, another 5 Wave sequence down to 1552.52, and a final sequence up to 1560.26. This higher low, lower high formation can be an indication of a nested inverted corrective wave, and that is exactly what happened today. The market gapped down at the open, dropping to 1539.80. For the next hour the SPX bounced in a narrow range, hitting a low of 1539.50. This choppy trading will prove to be the most important aspect of today’s trading.

After bouncing around the 1539.50 low, the market staged a rally that carried all the way to the close. After rising to 1548, the market again bounced around in a narrow range until shortly before the close. The SPX then made it all the way to 1554.66 before dipping into the close.

 

As I mentioned above, the market seemed to be forming a nested inverted corrective wave from the 1564.86 high. These waves can be very powerful, and that is what unfolded today. These waves require many waves to complete near the end of the formation, as four degrees of waves need to form before the wave has completed. Taking a closer look at the choppy trading shortly after the opening gap down, reveals how these waves were completed.

There are too many waves to delineate on the 3 Minute chart, so I expanded to a 1 Minute chart for demonstration purposes. The highest degree wave is in blue, then light purple, green and deep purple. I will explain this wave inside out, meaning I will start with the lowest degree wave, and end with the highest. This shows how the waves are connected.

The lowest degree wave began at yesterday’s 1552.52 low, and formed 1552.52-1560.26-1539.80-1541.54-1541.42-1544.12, and had a model value of .9999. The next degree wave started at the 1562.60 high, with Wave 1 completing at 1552.52, and Wave 2 completing at 1544.12, the termination point of the lesser degree sequence. This sequence was 1562.60-1552.52-1544.12-1540.64-1542.38-1539.50, with a model value of .999998. The next degree wave followed the same pattern, and went 1549.80-1562.60-1539.50-1541.82-1539.86-1542.23. The model value for this sequence was .9962. The final sequence from the 1564.86 then completed as1564.86-1549.80-1542.23-1541.16-1541.68-1540.29, and a model value of .9962.

From the completion of that wave at 1540.29, the SPX then completed a 5 Wave sequence to 1554.66 that contained an inverted corrective Wave 4. The main sequence consisted of 1540.29-1545.01-1542.39-1548.10-1547.55-1554.66, and a model value of .9988. The inverted corrective Wave 4 started at 1548.10, and formed 1548.10-1545.61-1547.17-1544.19-1549.76-1547.55. This sequence had a model value of .9948.

 

Looking at the larger picture, the market has completed 3 Waves from 666.79, 666.79-1370.58-1538.57-1564.86. It is possible that from that point waves 4, and 5 also formed, with a move below 1538.57 confirming that. With the nested inverted corrective wave completing today, and holding above 1538.57, the more intriguing possibility is that 1540.29 marks the end of Wave 4 from 667, with Wave 5 now underway. Further evidence of this count is the fact that nested inverted corrective waves normally indicate trend reversal points, and the Waves 1, 3, and 5 from 1540.29, are expanding. Normally at the end of a wave structure, the waves will contract, much as they are with the larger wave structure from 667.

Given the structure already completed, Wave 5 would have an upper limit of 1589. More accurately, a termination point above 1589 falls below my correlation threshold for the points (666.79, 1370.58), (1538.57, 1564.86), (1540.29, X), where X is the termination point of Wave 5.

Thank you.

 

 

 

 

 

 

Thursday's Market 04/04/2013

Although my analysis on Tuesday concerning Wednesday’s possible market action seems to have been prescient, and I certainly hate to be the one to rain on my own parade, I believe it is more important to get things right, than to be right.

The market followed one of my scenarios quite precisely, but also left a number of questions. As I noted yesterday, the wave shape looks quite odd, and given my count on the 3 Minute chart as of EOD Tuesday, the decline from 1573.66 to 1549.80 looks, and counts, best as a single 5 Wave sequence. I will address this in more detail shortly, but first a review of today’s action.

 

This morning the market continued the rally it began yesterday afternoon, rising to 1562.60. This completed a 5 Wave sequence from 1549.80 with 1549.80-1555.80-1557.34-1560.88-1559.80-1562.60, and a model value of .9999. This wave contained an inverted corrective Wave 2, forming 1555.80-1553.68-1556.17-1554.60-1557.56-1557.34, which has a model value of .9981.

From there, the SPX formed a simple 5 Wave sequence as 1562.60-1552.71-1560.40-1553.83-1556.18-1552.52, this sequence has a model value of .9955. After reaching the 1552.52 low, the market rose again, but failed to reach a new high for the day. This sequence went 1552.52-1554.91-1556.19-1559.42-1556.66-1560.26, and also contained an inverted corrective Wave2. The main sequence had a model value of .9981, and Wave 2 traced out 1554.91-1553.88-1557.77-1556.80-1557.19-1556.19. This sequence had a model value of .99996.

 

Today’s market had the feel of a consolidation day following Wednesday’s big decline. With no clear trend emerging today, the question of where the market goes next remains, which leads back to the first part of this post. One other thing that has bothered me has been the failure of a larger 5 Wave sequence to emerge from the 1538.57 low. There are not usually this many peaks and valleys without some sequence completing. I spent a good deal of time today reviewing the move from that point, and concentrated on the move from 1546.22 to 1573.66. After reviewing that part of the chart, one alteration clears things up a bit. Between 1551.90 and 1570.57 there is a peak visible at 1568.30. It is most likely that a 5 Wave sequence from 1551.90 completed there, and then formed a semi-inverted corrective wave from 1568.30 to 1558.47. This count can be seen in parentheses on the 15 Minute chart. A 5 wave sequence from 1546.22 then emerges as 1546.22-1563.95-1551.90-1568.30-1558.47-1573.66. This sequence has a model value of .9997, and completes at the peak.

If this count is correct, and I believe it is, the first four points from 1538.57 are most likely a series of Wave 1’s. This would indicate a further move to the upside is close at hand. Since several counts are still possible, and going into each one in detail is not helpful. What is helpful at this point is to watch important market levels that will indicate the next market move.

The first level to watch is still the 1565.50 level. A 5 Wave sequence from 1538.57 could still terminate at this point, and the market would then see another move down, which will hold above 1538.57, and one final move higher to a marginal new high.

If the market moves above 1565.50, the nested inverted corrective wave that I have favored for awhile would be the most likely outcome. This would indicate a substantial move to the upside

To the downside, 1547 is the point to watch. The market could complete an inverted corrective wave from 1561.56 at this point. If an inverted corrective wave does complete at this point, I would anticipate two moves higher similar in size to the 1538.57 to 1561.56 advance, separated by a corrective Wave 4. This would put the market in the 1580-1600 range.

If the market moves below 1547, a larger move to the downside has most likely started. If the market follows that up with a move below 1538, we could move substantially lower.

Thank you.

 

 

 

 

 

 

Wednesday's Market 04/03/2013

Yesterday I wrote this:

“The second scenario would be slightly more bearish. If the market moves slightly lower, between 1560.40, and 1562.90, it is possible that an inverted corrective Wave 2 from 1563.95 has completed. From there, a rise to 1564.70-1565.40 could complete a 5 Wave sequence from 1538.57, and Wave 3 from 666.79. I would then expect a correction, which will hold above 1538.57, followed by one more wave moving above 1565. That would complete a 5 Wave sequence from 666.79 and portend a more severe correction.”

 

After a slightly higher open to 1571.47, the market began to pull back. Soon the SPX found itself at 1562.85. This was within the first range mentioned above. The high from that point was 1564.86. Again, within the range mentioned above. The market then quickly fell below the previous low of 1562.85, and it was down from there, with only feeble rally attempts until it reached 1552. From there the market rallied to 1537 before falling once again. Soon the market hit the low of the day at 1549.80, and then rallied slightly into the close.

Given the narrow ranges that this wave had to fall into, I have to say I was a bit surprised when the SPX actually moved exactly within those ranges. Admittedly, the wave itself is a bit odd looking, but at the moment my best interpretation is that SPX completed a 5 Wave sequence today from 1538.37 at 1564.86, and Wave 3 from 666.79.

 

I will break down the entire wave structure over the weekend, but for now the main sequence turned out to be 1538.57-1561.56-1545.90-1564.91-1546.22-1564.86, and a model value of .9975.

From the 1564.86 high, the market then completed a 5 Wave sequence down 1549.80. This wave again contained an inverted corrective Wave 2, and breaks down as 1564.86-1562.62-1557.36-1553.85-1554.54-1549.80. This sequence gives a model value of .9978.

With Wave 3 from 666.79 most likely completed, I would expect Wave 4 down, followed by a Wave 5 higher to ensue. Wave 4 may have completed today at 1549.80, but could move lower. This wave needs only to hold above the 1538.57 low. Wave 5 will most likely be quick. If Wave 4 did end today Wave 5 should reach 1567, but go as high as 1591. I will be looking for a 5 Wave move higher, and then a break below 1549.80. A break below 1538.57 at this point would mean the sequence from 666.79 has completed.

Thank you.

 

 

 

 

 

Tuesday's Market 04/02/2013

After dropping to 1558.47 on Monday, I was looking for the market to subsequently rally to the 1578 level. The market built on the small rally into yesterday’s close this morning, moving markedly higher at the open. Although it is most likely that the SPX formed Waves 1, and 2 of a 5 Wave sequence that will ultimately bring the index to 1578.24, the failure to reach that level today has opened up several interesting possibilities.

 

 

The market opened higher today, and kept running higher for the first hour and a half of trading until reaching the day’s high of 1573.66. This turned out to be a complex nested inverted wave structure.  You will see a series of 1’s from the 1558.47 low, and then the unwinding of the series moving into the high of 1573.66. The main sequence was 1558.47-1559.46-1569.86-1571.65-1571.03-1573.66. This gave a model value of .9978. This sequence can be seen in blue on the 3 Minute Chart.

 

After reaching that high the market struggled. A small pullback turned into a substantial drop from the highs, eventually reaching 1565.55. This was a more characteristic wave structure, a simple 5 Wave structure containing an inverted corrective Wave 2. This series was 1573.66-1572.43-1572.53-1570.16-1570.41-1565.55. The model value for this series was .9996.

 

The most reasonable interpretation is that these are Waves 1, and 2 of a 5 Wave sequence that will result in the SPX rising to 1578.24, my target for the sequence from 1546.22. If these indeed are Waves1, and 2, I would expect the market to move higher on Wednesday, or at a minimum, hold the 1565.55 low seen today. The market action today also opens up at least two other scenarios worth noting.

If the SPX fails to take out the 1570.11 high seen after the 1565.55 low, a drop to 1557 would complete a semi-inverted corrective Wave 4 from 1570.57, and I would then expect to see the market rally, with the 1576-1578 area remaining my target. A move above 1570.57 while holding the 1565.55 low would take this scenario out of play.

The second scenario would be slightly more bearish. If the market moves slightly lower, between 1560.40, and 1562.90, it is possible that an inverted corrective Wave 2 from 1563.95 has completed. From there, a rise to 1564.70-1565.40 could complete a 5 Wave sequence from 1538.57, and Wave 3 from 666.79. I would then expect a correction, which will hold above 1538.57, followed by one more wave moving above 1565. That would complete a 5 Wave sequence from 666.79 and portend a more severe correction.

In summary, I would still expect the SPX to move to 1578 unless the index falls to 1560-1563, rises to 1565, and then falls below 1560.

Thank you.

 

 

 

 

Monday's Market 04/01/2013

In my Weekend Outlook I said I expected the market to decline today, and gave 1563.50, and 1557.40 as likely termination points for the decline. After a slight move higher at the open, the SPX declined to 1563.77, and after a failed rally attempt wound its way down to 1558.47.

 

The market did open slightly lower, dropping below 1568 before rising just above Thursday’s high of 1570.28 to 1570.57. This then completed a 5 Wave sequence from 1551.90, with that sequence being 1551.90-1564.07-1561.08-1568.30-1564.42-1570.57. This yields a correlation coefficient of .997 for the points (1551.90, 1564.07), (1561.08, 1568.30), and (1564.42, 1570.57).

From that high, the market fell fairly swiftly, first completing a minor sequence with 1570.57-1569.88-1569.79-1568.02-1568.62-1564.89. This gave a model value of .999. That wave then grew into a larger sequence with 1570.57-1564.89-1565.48-1563.84-1564.53-1563.77, and a model value of .992. This low of 1563.77 was very close to my estimate of 1563.50 as a support level. The market did rally, rising to 1566.87, before falling again.

Once again, the previous low turned into Wave 1 of a larger sequence, and the market formed a wave of 1570.57-1563.77-1566.87-1561.87-1562.50-1559.46, which had a model value of .999.

After reaching the 1559 low, the market underwent a more sustained rally attempt. This 5 Wave sequence went 1559.46-1561.10-1559.61-1562.39-1559.87-1564.07 with a model value of .994.

The SPX then went on to complete one more 5 Wave sequence from the morning’s high of 1570.57. With the drop to 1559.46 as Wave 1, and the rise to 1564.07 as Wave 2, the market completed Wave 3 of this sequence at 1558.73. This wave broke down as 1564.07-1562.22-1561.85-1560.24-1560.44-1558.73, and a model value of .997. A rise to 1560.43 completed Wave 4, and a final drop to 1558.47 completed Wave 5.

 

This low again was close to my 1557.40 projection, which I stated was my preferred target over the weekend. There is a possible count that would accommodate one more move lower, actually to the 1557 level, but it appears that 1558.47 will be the low for this wave. Any drop significantly below 1557 would most likely mean my count is incorrect.

With what appears to be Wave 4 from 1546.22 now completed, it is possible to project a target for Wave 5. The sequence 1546.22-1563.95-1551.90-1557.70-1558.47-1578.24 would give a model correlation of 1, and therefore 1578.24 is my target for Wave 5. Another correction can be expected from that point.