Thursday's Market 07/10/2014

After falling to 1959.46 on Tuesday, the SPX continued the late Tuesday afternoon rally that followed that low into Wednesday. The index gapped higher at the open, and then chopped its way to a high of 1974.15. Today saw the SPX gap down, quickly dropping below Tuesday’s low to 1952.86. After that the index went into recovery mode, rallying back to 1964.10. After a slight pullback, the SPX continued higher, climbing back to 1969.84 before pulling back to 1962.16 before moving higher into the close.

With the SPX falling below Tuesday’s low of 1959.46, it now appears that my short term count was wrong. I had cautioned on Tuesday that there might be one more move down, and that seems to have occurred today. The decline from 1985.59 can now be counted as 1974.88-1977.58-1959.46-1974.15-1952.86. My mistake was in counting the move from 1974.88 to 1977.58 as 3 waves, when it appears to have been 5 waves. Without changing any other waves, the decline from 1977.58 to 1959.46 can be counted as a 5 wave sequence. The choppy action from the 1959.46 low also looks like a 5 wave sequence, 1967.56-1962.58-1971.15-1965.22-1974.15.

After falling to 1952.86 this morning to complete 5 waves from 1985.59, the SPX rallied. The initial bounce to 1964.10 was a 5 wave sequence. This was followed by a pullback to 1961.30, and then another 5 wave sequence to 1969.84. The pullback rally to 1969.84 appears to be Waves A and B of an inverted corrective wave 2. The decline to 1962.16 then completed Waves C, D, and E of this corrective wave. With Wave D also being an inverted corrective wave. If this count is correct the SPX should continue to rally, most likely to new highs.

I am still counting the decline from 1985.59 as Wave E of an inverted corrective wave that began in March at 1882.35. My lower limit of 1937 for this decline is based on the range in which Wave E of this inverted corrective wave can complete.

Tuesday's Market 07/08/2014

The SPX continued the decline that began yesterday, gaping down at the open, and then continuing lower to 1962.59 without a meaningful bounce. After moving up to 1966.08 the index chopped lower, falling to 1959.46. A more substantial bounce to 1967.56 followed, with the SPX then fading into the close.

From last Thursday’s 1985.59 high it is now possible to count a 5 wave sequence to today’s 1959.46 low within the range needed to complete the next higher degree wave. This count can be seen on the 5 Minute chart. The SPX first completed a 5 wave sequence at 1974.88, which was followed by an inverted corrective Wave 2. Waves 3, 4, and 5 completed in quick succession, with Wave 5 completing at 1959.46. A move below 1959.46 would indicate there is further downside to this wave, but I see the lower limit of this decline 1937.

Looking at the wave count on the 60 Minute chart, it appears that the SPX completed a 5 wave sequence from 1814.36 Thursday at 1985.59. Wave 1 completed at 1884.89. Wave 2 was an inverted corrective wave which completed as 1850.61-1891.33-1862.36-1955.55-1925.78. Wave 3 then completed at 1968.17 and Wave 4 at 1944.69. After the completion of Wave 4, it was possible to calculate the range in which Wave 5 should complete. This range is between 1972 and 1994, so Thursday’s 1985.59 fits nicely as the Wave 5 top.

The 4 hour chart shows that the 5 wave sequence from 1814.36 that completed on Thursday was Wave D of an ongoing inverted corrective Wave 2 from 1882.35. The current decline is thus Wave E of that inverted corrective wave. If the decline is over, the SPX should now go on to complete Waves 3, 4, and 5 to the upside. This would complete Wave 5 from 1560.33, and complete the sequence from the October 2011 1074.77 low. With 4 waves from the 1560.33 low completed, the Wave 5 range can again be calculated, and yields 1957-2064 as my current target.

Since this market has been so resilient, and seemingly unwilling to make any sustained move to the downside, I will continue to monitor it one wave at a time.

Monday's Market 07/07/2014