The SPX
reversed the trend of the previous two days by gapping down at the open instead
of up. But unlike the last two days, there would no closing of the gap today.
Within ten minutes the index had dropped to 1978.37, and then tried to rally.
After reaching 1983.17 the SPX moved lower again, this time falling to 1974.37.
After that the index moved slightly higher, trading sideways between that low
and 1979.95.
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:
It was an interesting day, and as I remarked yesterday
the SPX did leave us with something to think about this weekend. Yesterday
afternoon the index completed Wave E from 1989.06 at 1985.79, and then bounced
to 1989.06 before the close. That bounce, coupled with the drop this morning,
and the ensuing rally to 1983.17 completed an inverted corrective wave as
1985.79-1989.06-1978.37-1981.39-1980.41-1983.17. Another 5 wave decline
followed, completing at 1974.37. Looking at the 5 Minute Chart from 1986.24,
the SPX completed sequences at 1981.27, 1989.06, 1985.79, 1983.17, and 1974.37.
By putting these together, and then pairing them off, one gets the points (1986.24,
1981.27), (1989.06, 1985.79), (1983.17, 1974.37). These points have an R^2 value
of .990955, and thus complete a sequence. Given this it appears that the entire
move from 1986.24 to 1974.37 has been one complete corrective wave. The count
from the 1965.77 low now becomes Wave 1 at 1971.20, Wave 2 at 1973.37, Wave 3
at 1986.24, and now Wave 4 at 1974.37. The change in wave structure also requires
a change in the target price, which I would now put at 1987-1990.
There is another possibility I will discuss. Looking
at the waves from 1965.77 to 1986.24 on the 5 Minute Chart, I have been
counting this as three waves, 1971.20-1973.37-1986.24. With one minor wave
addition this counts as a complete 5 wave sequence. 1971.20 would be Wave 1,
what I have labeled as Wave A would be
Wave 2, Wave B would be Wave 3, and Waves C, D, E, 1, 2 would an inverted corrective
Wave 4. There is a small wave between Waves 2 and 3, and I count this as a Wave
1, and a Wave 2, Waves 3, 4, and 5 complete that sequence. This gives
1965.77-1971.20-1969.51-1975.51-1979.62-1989.06. This would give an R^2 value
of .999781. This second scenario would require the move from 1965.77 to 1986.24
to be a complete 5 wave sequence.
Considering this for the moment as a completed 5
wave sequence, and looking back at the 10 Minute Chart, another larger wave
sequence may also have completed today. Recall Wave 1 on that chart completed
at 1969.84. A sequence then completed at 1955.59, another at 1979.91, and a
third at 1965.77. Assuming another sequence completed at 1986.24 as explained
above gives the fourth sequence, and I described how another sequence completed
from that point today at 1974.37 for the fifth. Taken together these waves can
be seen as1969.84-1955.59-1979.91-1965.77-1986.24-1974.37. This gives the
points (1969.84, 1955.59), (1979.91, 1965.77), (1986.24, 1974.37). These points
have an R^2 of .99323, which would complete a sequence.
Yesterday I mentioned that if the current wave
were to complete short of 2003, I would expect a pullback of about 14 points,
which was the extent of Waves 2 and 4 of the wave from 1952.86. The wave that
completed today from 1986.24 was about 12 points (1986.24-1974.37).
Given the possibilities, it seems most likely that
the SPX completed an inverted corrective Wave 2 from 1969.84 as seen on the 10
Minute Chart. If so this would likely alter the targets for this wave. This
does not change my view that the SPX still has at least a couple of waves
higher to complete before the wave from 1074.77 ends.
