Tuesday 04/07/2020

It was another gap up opening for the SPX. After opening at 2738.65, the index rose to 2756.89 before falling back. That proved to be the high of the day, and after the higher open, the SPX spent the rest of the day giving back all of it's gains. It didn't take long for the SPX to drop back to 2688.03 before trying to regroup and move higher. It did rally to 2746.03, but after that it was all downhill. An hour before the close the index was at 2669.55, erasing all of it's gains. The last hour was spent trying to break back into positive territory, but every rally was met with more selling. The SPX hit the low of the day at 2657.67, and closed only slightly above that level.

Going into this morning I was looking for a wave 5 from the 2447.49 low to complete either at Monday's high, or possible up to 2692. This morning's opening move to 2756.89 was obviously higher than I was looking for. So a review of the chart was in order:

Looking at the entire wave structure, the SPX made it's first move to 2475.51 off that low. From there, one can count 4 pullbacks before yesterday. 2475.51-2464.39, 2488.78 - 2466.10, 2614.54 - 2594.55, and 2636.28 - 2620.52. Taking the first 3 as points, (2475.51, 2464.39), (2488.78, 2466.10), (2614.54, 2594.55), gives an R^2 value of .9943, which satisfies my model for a 5 wave sequence. Taking the last 3 sets, (2488.78, 2466.10), (2614.54, 2594.55), and (2636.28, 2620.52) gives an R^2 value of .9995, which also would satisfy my model. I usually label sequences as they complete, and so the first 3 pullbacks were labeled as a-b-c-d-e(2). So the entire wave structure was 1-a-b-c-d-e(2)-3-4. This resulted in the wave projection I gave last night. Equally possible would be 1-2-3-a-b-c-d-e(4), as the last 3 pullbacks qualify as a completed sequence. Using that count, 2756.89 would satisfy the conditions for a 5 wave sequence. As (2459.96, 2475.51), (2464.39, 2488.78), (2620.52, 2756.89) yields an R^2 value of .9997.

With the wave from 2459.96 completed at 2756.89, the next move would be a pullback. As we saw today, the SPX did pull back, in what appears as 3 waves from that high; 2688.03 - 2746.03 - 2657.67. This also brought the SPX into oversold territory on the 15 minute chart.

Taking the pullback from wave 1 which was 2538.18 to 2459.96, and the 3 waves of today's pullback gives (2538.18, 2459.96), 2759.89, 2688.03), (2746.03, 2657.67) gives an R^2 value of .9938. So it looks like the SPX has completed waves 1-a-b-c-d-e(2). The next move appears to be up.

The SPX now seems to be in the last stages of Wave 5 from the 2191.86 low. While I am still looking for higher levels, those higher levels may be minimal. My target for this wave remains 2755 - 2888, a level that the SPX already reached this morning when it hit 2756.89. Unless the SPX manages to move above 2888, I view this as the index reaching the end of this move higher. There are always alternatives of course, but I'll wait until this wave completes before getting into any of those.

Monday 04/06/2020

On Friday I described the decline from 2538.18 to 2459.96 as a complete 5 wave sequence. From that point, in the last hour and a half of Friday's session, the SPX did some technically productive work, putting a series of higher highs, and lower lows on the 5 minute chart.

This morning the SPX continued that positive tone in a big way. A gap up at the open, to 2578.28, started the day off, and the index continued higher right until the close, with only minor pullbacks along the way. From the 2459.96 low, the SPX looked to have formed a wave 1, followed by waves a, b, and c of 2, an inverted corrected wave. The opening surge to the SPX to 2614.54, making wave d of wave 2, and the pullback to 2494.55 completed wave d, and the entirety of wave 2. It then looks like the move higher to 2636.28 formed wave 3, the pullback to 2620.52 wave 4, and the push up to 2676.85 near the close could be wave 5. The 5 waves outlined above satisfy my model for the completion of a 5 wave sequence, and the SPX is in overbought territory on the short term charts. Using my thresholds, this wave could complete anywhere from today's high of 2676.85, on up to a maximum level of 2692. So it is conceivable we see a continuation at the outset tomorrow.

On Friday I mentioned a slight adjustment to my count from the 2191.86 low. The adjustment affects Wave 3, which started at 2360.25. I originally had called 2637.01 as the end of that wave, but after some review, I would label that as wave d of 2 of an inverted corrected wave, the pullback to 2520.02 as the completion of wave 2, and then the three waves up to 2641.39 as waves 3,4, and 5, completing the wave from 2360.25. The move from 2641.39 down to 2447.49 still counts as a 5 wave sequence from 2641.39 to 2447.49, so the only thing this does is slightly alter the range for the completion of wave 5. I had been mentioning 2749 to 2886 for that range, but will change that to 2755 to 2888.

So to review, I see the SPX as having completed 4 waves from the 2191.86 low. The target range for wave 5 is between 2755 and 2888. Wave 4 of this sequence completed at 2447.49. Wave 1 of 5 completed at 2538.18. The second "wave" completed at 2459.96. This could be wave 2, or wave a of in inverted corrective wave.  The third wave of the sequence is in progress, and will complete either with today's high, or possibly up to 2692. At that point the index should pull back before continuing higher.

Friday 04/03/2020

The SPX opened slightly lower this morning, before moving higher, to slightly above yesterday's high to 2538.18. From there it was all downhill, as it has mostly been on Fridays. Seems like no one wants to carry their longs into the weekends. So except for a few very minor rallies, the index went pretty much straight down from 2538.18 to the low of the day at 2459.96. The SPX did then move slightly higher into the close, making it back to 2497.10 shortly before the close.

Picking up on the count from where I left off yesterday, the SPX had completed Wave 2 from the 2447.49 low, and was moving higher in what appeared to be wave 3. With the move to slightly higher levels this morning, the index looks like it actually completed waves 3 and 4 yesterday, and wave 5 of the sequence this morning. The entire sequence would the be 2447.49 - 2488.09 - 2467.68 - 2509.07- 2492.10 - 2538.18.

Looking at the move from this morning's high of 2538.18 to the low of 2459.96, it looks the SPX completed a 5 wave sequence to the downside. Wave 1 ended at 2495.78. Wave 2 was the meandering inverted corrective wave that terminated at 2487.72. Waves 3, 4, and 5 then followed at 2464.42 - 2473.97 - 2459.96.

So my ongoing count is still intact. From the 2191.86 low, the SPX completed the first wave at 2300.73. The index then formed an inverted corrective wave 2 the ended at 2360.25. My count then has wave 3 ending at 2637.01. In looking at it again today, there is a count that has wave 3 completing at 2641.39. Either way, there is a 5 wave count down, that ends at 2447.49, for the fourth wave. I'll cover that in more detail this weekend. So this count suggests the SPX will rise in a wave 5, with a target of 2749 - 2889.