Thursday's Market 07/24/2014

Today was almost an exact duplicate of yesterday. After a higher open, the SPX reversed course, dropping into negative territory. After that the index reversed course once again, moving up to a new all time high by late morning. After establishing that new high, the SPX drifted mostly lower throughout the afternoon.

2 Day Chart:

The SPX is currently in Wave 5 from 1074.77 with a minimum target of 1776, and an optimal target of 2041-2046. Wave 5 began at 1560.33.

4 Hour Chart:

This chart shows the progress of Wave 5 described above. Four waves have completed, along with Waves 1, and 2 of 5. Wave 5 target is between 1957 and 2064.

10 Minute Chart:

With Waves 1 and 2 completing at 1882.35 and 1952.86, this chart is tracking Wave 3 of 5 from 1952.86. Currently four waves of Wave 3 have completed, with a Wave 5 target of 2003-2060, and an optimal target of 2018.

5 Minute Chart:

Wave 4 of 3 completed at 1965.77. This chart tracks Wave 5 of 3. As is shown on this chart, four waves of the 5 wave sequence from 1965.77 have completed. The target for wave 5 is 1998-2008. This chart is also tracking the progress of Wave 5. I am counting yesterday’s 1989.06 as the completion of Wave 1. I further identified yesterday afternoon’s 1984.81 low as either Wave 2, or Wave A of a more complex corrective Wave 2. From that 1984.81 low, the SPX completed a 5 wave sequence at today’s 1991.39 high. Another 5 wave sequence followed, this time to the downside, and completed at 1987.03. The index first moved higher to 1990.24, and then lower to 1985.79, before moving higher into the close.

The 5 waves from the 1989.06 high can be seen as 1989.06-1984.81-1991.39-1987.03-1990.24-1985.79. The points (1989.06, 1984.91), (1991.39, 1987.03), (1990.24, 1985.79), have an R^2 value of .994393, meaning that this sequence counts as a complete sequence, and most likely Waves A, B, C, D, and E of an inverted corrective Wave 2. There is one caveat to this; Wave E (1985.79), did complete below the Wave 1 high (1989.06). In many instances of the past several weeks this type of corrective wave has turned out to be only Wave A of a larger corrective wave. If this is the case I would not be surprised if the SPX moved slightly lower from here, but the decline should be similar in size to Wave A, perhaps 3-5 points.

One other thing to keep in mind is that a similar thing may be happening from the 1952.86 low as seen on the 10 Minute Chart. My target for this wave is 2003-2060, while the target generated so far by Wave 5 of this sequence from 1965.77 is 1998-2008. The sequence from 1965.77 can complete below 2003, which would not complete the sequence from 1952.86. If this does happen, I would expect a decline similar to the ones seen between Waves 1 and 2, and Waves 3 and 4, both of which were around 14 points. The SPX will no doubt give us something to think about over the weekend. 

Wednesday's Market 07/23/2014

The SPX gapped higher again this morning, but this time quickly reversed and closed the gap within the first twenty minutes of trading. The index reached 1987.46 before falling back to 1982.44. The rest of the morning saw the SPX moving higher, making it to 1989.23. A decline to 1984.81 followed, with the index rallying back to 1988.73 before the close.

2 Day Chart:

This chart shows the main wave from 1074.77 that I have been tracking. So far the SPX has completed four waves of the 5 Wave sequence. Wave 1 completed at 1292.66, Wave 2 at 1158.66, and Wave 3 at 1422.38. Wave 4 was an inverted corrective wave, which completed as 1422.38-1266.74-1474.51-1343.35-1687.18-1560.33. The points (1422.38, 1266.74), (1474.51, 1343.35), (1687.18-1560.33) give an R^2 value of .995468. Given the waves already completed, a Wave 5 target can be extrapolated. The minimum value for this target is 1776, which has already been surpassed, with an optimal target of 2041-2046. The range for this target is admittedly large, so tracking the smaller degree waves should help narrow the range.

4 Hour Chart:

As shown on the 2 Day Chart, Wave 4 from 1074.77 completed at 1560.33. The 4 Hour Chart picks up the count from that point. Once again, it appears that the SPX has completed four waves of this sequence. Wave 1 completed at 1709.36, with Wave 2 being an inverted corrective wave that completed at 1646.47. Wave 3 completed at 1850.84 and Wave 4 at 1737.92. Again, with four waves completed, a Wave 5 target can be generated. This target is 1957-2064. Additionally, from the Wave 4 low of 1737.92, Waves 1, and 2 of 5 have completed, at 1882.35, and 1952.86, with Wave 2 being a very complex inverted corrective wave.

10 Minute Chart:

1952.86 is then the starting point on the 10 Minute Chart. So far, this wave also has completed four waves. Wave 1 ended at 1969.84, and was followed by another complex corrective wave, this time a semi-inverted one, which completed at 1955.59. Waves 3 and 4 can be seen as completing at 1979.91, and 1965.77. The target arrived at for this sequence is 2003-2060, with an optimal value of 2018.

5 Minute Chart:

With Wave 4 on the 10 Minute Chart completing at 1965.77, the 5 Minute Chart shows the progress of the wave from that point. This wave has also completed 4 of the 5 waves at 1971.20-1973.37-1986.24-1981.27. This structure gives a target for Wave 5 of between 1998 and 2008. When this wave completes, it will mark the end of the third wave from 1937.92 as seen on the 4 Hour Chart. I would then expect another shallow decline for Wave 4 and then one final move higher for Wave 5. This should complete the entire sequence from 1074.77 as seen on the 2 Day chart. 

Tuesday's Market 07/22/2014

It was another gap higher open to begin the day. After running up quickly to 1982.58, the SPX paused slightly, and then stair stepped to 1986.24. The index then traded sideways in a narrow range through mid-afternoon before breaking down to 1981.27. This was followed by a recovery to 1985.07 before a dip into the close.

5 Minute Chart:

Continuing my short term count from yesterday, the SPX followed up the inverted corrective Wave 2 with a 5 wave sequence to 1986.24. This completed as 1973.37-1982.58-1979.62-1985.06-1982.85-1986.24. Taking the points (1973.37, 1982.58), 1979.62, 1985.06), 1982.85, 1986.24), yields an R^2 value of .991167. The SPX then completed a sequence lower as 1986.24-1984.13-1986.13-1983.96-1985.35-1981.27, with the points (1986.24, 1984.13), (1986.13, 1983.96), (1985.35, 1981.27) having an R^2 value of .996333. After rebounding to 1985.07, the SPX dipped slightly. Short term support is at 1977, with resistance between 1990 and 1999.

10 Minute Chart:

The 10 Minute Chart shows the wave sequence from the 1952.86 low. So far the SPX has completed Wave 1 at 1969.84, which was followed by a very complex corrective wave to 1955.59. I have this labeled as Wave 2 on the chart. A sequence higher to 1979.91 followed, and then a sequence lower to 1965.77. I currently have these labeled as Waves 3, and 4. Given this count, Wave 5 would need to complete above 2003. There is also the possibility, as I alluded to a couple of days ago, that these waves are still part of an even more complex corrective wave from 1969.84, or the Wave 1 top. This scenario may come into play if the SPX does drop to 1977 as discussed above. I will cover this in detail when and if it happens.

60 Minute Chart:

On the 60 Minute Chart the completed Wave structures from 1814.36 to 1985.59, and 1985.59 to 1952.86 can be seen. These are labeled Wave D, and Wave E. Wave D completed as 1814.36-1884.89-1925.78-1968.17-1944.69-1985.59. These points, (1814.36, 1884.89), (1925.78, 1968.17), and (1944.69, 1985.59) have an R^2 value of .999222. Wave 2 was an inverted corrective wave with the points (1884.89, 1850.61), (1891.33, 1862.36), and (1955.55, 1925.78) having an R^2 value of .995999.

4 Hour Chart:

On the 4 Hour Chart, the entire sequence from 1560.33 can be seen. This is the sequence that needs to complete to end the larger sequence from 1074.77. So far I count 4 completed waves, 1709.36-1646.47-1850.84-1737.92. Given this structure Wave 5 can be projected to complete between 1957 and 2064.

2 Day Chart:

This is the Wave that most are waiting for. As shown on the chart, 4 waves have completed. The SPX is already within the range to complete this wave, however the smaller degree waves must resolve themselves before it can actually complete.