Thursday's Market 10/23/2014

The SPX moved higher from the opening bell today, rising to 1849.56. After a small pullback the index rose first to 1953.09, and then 1957.65. The first substantial pullback followed from that point, as the SPX fell to 1951.82. After that one more move higher occurred, taking the index to 1961.95. From that point the SPX began to pullback in earnest, falling to 1949.11 before bouncing back to 1955.15. One final move lower took the index down to 1948.12 shortly before the close.

As I discussed yesterday, the SPX completed a 5 wave sequence from the 1835.02 low yesterday at 1949.31. This looks to be the first wave of a larger degree sequence from that low. The first three waves of an inverted corrective Wave 2 occurred yesterday, with today’s rally completing the fourth wave.  The current decline looks to be the fifth wave.

Given this count the SPX should continue lower tomorrow, with a target of 1935-1933. After that I would look for a continuing of the advance from 1835.02, with a target of 1980.

Wednesday's Market 10/22/2014

The SPX did not hit y target price of 1960-1985 today, and then dropped below 1929.35, the point at which I said would invalidate my short term count. Given those facts, it is most likely that a 5 wave sequence from 1877.55 completed today at 1949.31 as 1877.55-1896.60-1891.55-1834.30-1929.3.5-1949.31. This also may have completed a sequence from 1835.02 as 1835.02-1867.82-1852.17-1898.16-1877.55-1949.31. If so, the next thing I would be looking at is an inverted corrective wave from the previous high, or 1869.00. The pullback from today’s high took the form 1935.24-1941.24-1926.83. The five waves from 1969.00, 1835.02-1949.31-1935.24-1941.24-1926.83, falls just shy of the requirements for a completed 5 wave sequence.

Yesterday I said that the SPX may undergo a substantial pullback once it completes the current wave. That now does not appear to be the case. If the SPX moves higher from this point, the sequence from 1835.02 is extending, pointing to higher prices. If the SPX drops, it would likely complete an inverted corrective wave from 1869.00, again pointing to higher prices. This inverted wave would complete anywhere down to 1907. With the index falling just short of the point needed to complete this wave, it seems more likely that the wave from 1835.02 is extending.

Tuesday's Market 10/21/2014

The pullback that I was expecting for today obviously never materialized. Instead the SPX continued to push higher with a vengeance. When I made a post on Sunday that I was looking for 1921 on Monday, I thought I was pushing it. Who would expect a 35 point daily move. The index did not hit 1921 on Monday, but made up for it with a 37 point move today.

I thought the SPX had completed a 5 wave sequence from Friday’s 1877.55 low to 1896.60 on Monday. This would have been Wave 3 from the 1835.02 low. Instead it turned out to be only Wave 1 of 3 from that low. The move from 1896.60 to the end of the day was an inverted corrective Wave 2, and Wave 3 of 3 looked to have completed today at 1934.30. The small pullback was likely Wave 4, with Wave 5 now underway.

Given this count, Wave 5 of 3 has a target between 1960 and 1985, with an optimal target of 1970. As I mentioned earlier, this looks to be only Wave 3 from the 1835.02 low. After a pullback, the SPX would still need to complete a 5^th Wave higher. Since Wave 3 is already quite a bit longer than Wave 1, Wave 5 should be even longer still. A decent sized pullback would be needed to temper the next move higher.

Once the wave from 1835.02 completes, the index will still need to complete the sequence from the 1820.66, so the possibility of a continued strong move to the upside exists. This could all still unwind without the market making new highs, but I prefer the count that has this move carrying to new highs, possibly 2070.