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.  

Monday's Market 10/20/2014

The SPX started slightly to the downside today, dropping to 1882.30 at the open. The index then traded higher in choppy fashion until it reached 1896.60. At that point the SPX pulled back to 1891.55 before moving higher the rest of the day, topping out at 1905.03.

From Friday’s 1877.55 low the SPX completed a 5 wave sequence later that day at 1892.16. The drop this morning completed the first 3 waves of an inverted corrective wave that later completed at 1890.06. A quick move to 1895.97-1892.49-1896.60 then completed a larger degree sequence from the 1877.55 low.

This looks to have completed the third wave of a sequence from 1835.02. The pullback to 1891.55 looks to have been the fourth wave of this sequence, and the rise to 1905.03 then completed the fifth. This completes a sequence from the 1835.02 low. The SPX should decline from this point, with support near 1878.

Looking at the sequence from the 1820.66 low, the index completed the first wave at 1869.00, and has been forming an inverted corrective wave 2 since then. Today completed Wave B of that wave. Again, the SPX should now move lower, possibly to 1878. Whether that occurs as one wave or three will determine whether the index will decline further, or resume the move higher.

1921 On Monday?

Thursday's Market 10/16/2014

The SPX opened lower again this morning. After falling to 1835.02, the index began to rally. It rose in choppy fashion to 1876.01 before falling back into the close.

The SPX, although opening lower, managed to hold above the 1820.66 low. From that point the index looks to have completed a 5 wave sequence higher at 1876.01. The index looks to again be at a critical point. With a 5 wave sequence today 1876.01, there is a danger of the SPX again rolling over and continuing its slide. If this should happen there looks to be support at around 1819. At this point I am still looking at 1820.66 as a longer term low. My current count would have the SPX moving higher, with 1880 as a likely resistance level. If the index moves up to that level 1865 would become support.

Wednesday's Market 10/15/2014

It was a brutal day for the SPX, with the index plunging at the open to 1837.22. After a brief attempt at a rally that brought the SPX back to 1866.64, the index dropped once again, this time reaching a low of 1820.66.

I will be the first to admit that I have not tracked this decline very well, so I will proceed cautiously. The two scenarios I outlined for the longer term outlook yesterday remain intact. Short term, the SPX still looks to have completed a 5 wave sequence from 2019.26 last Friday at 1912.84. The quick choppy action from that point has been the problem for me. After today’s action it looks like the SPX completed an inverted corrective wave as 1935.56-1890.90-1912.02-1874.14-1898.71. So from 2019.26 the index could have completed Wave A at 1912.84 and Wave B at 1898.71. The first drop today may have been Wave C, the bounce to 1866.64 Wave D, and the final drop to 1820.66 as Wave E. This is supported to an extent by virtue of the SPX finally making a higher short term high by moving above the 1866.64 Wave D this afternoon. The move off the 1820.66 low also looks to be an incomplete wave, suggesting further upside is possible.

The short term wave structure suggests a move higher to the 1888 level, with some indications that if this does occur, it should happen early in the trading day. After that a pullback to 1847 seems likely. Obviously if the SPX drops below the 1820.66 low this scenario would be invalidated. Support is possible below 1810, but the next major support would likely be the 1748 level.

Tuesday's Market 10/14/2014

Last Friday the SPX fell to 1912.84 and completed a 5 wave sequence from the 2019.26 high. I thought there was a good chance that the index would rally from that point, but that turned out to be only the first wave of a higher degree sequence from that high. The SPX appears to have completed that sequence today at 1871.79. The first step in confirming this as a low would be a move above the previous short term high of 1898.71 hit earlier in the day.

I have been looking for this decline to complete in one of three ways. One of those scenarios was made highly unlikely with the drop below 1881, so I will briefly outline the other two. Looking at the weekly chart I have identified 5 waves as having completed from the 666.79 low. The initial move to 1219.80 is counted as Wave 1 in both scenarios. My current count has the next waves as 2 and 3 at 1010.91 and 1370.58. The following decline is labeled as Wave A of an ongoing corrective Wave 4. Wave B then completed at 2019.26, putting the SPX currently in Wave C of 4. Given the current wave structure, Wave 5, when it unfolds, is likely to be quite short. Consequently the decline preceding Wave 5 also needs to be shallow. To accomplish this, the current Wave c of 4 needs to be shorter than Wave A, which was around 295 points, and Wave E of 4 will need to be shorter still. This obviously still leaves some room to the downside, but with the SPX completing a sequence, and the need for a shallow Wave E, it is possible that this is the end of Wave C. Wave D should then carry the SPX to new highs, and be followed by a Wave E decline to complete Wave 4. One more move to new highs would then complete the sequence from 666.79. An EW equivalent count would be I-II-1-2-3-4-III-IV-V, with the SPX currently in Wave 4. This is the same wave structure as the wave from 1074.77 to 2019.26.

The second scenario is much more bearish in the near term, but may turn out to be more bullish in the longer term. Again Wave 1 can be seen as the move from 666.79 to 1219.80. The entire move from that point can be counted as an ongoing inverted corrective Wave 2 with Wave A completing at 1010.91, Wave B at 1370.58, Wave C at 1074.77, and Wave D at 2019.26. The SPX would then be currently in Wave E of 2. The minimum target for this wave would be 1748, but would likely carry lower than that. This would then need to be followed by Waves 3, 4, and 5. I had discounted this scenario for some time, as until recently the need for this wave to exceed the 295 point decline of Wave C would have taken the index below the 1370.58 high, which seemed unlikely. The SPX however has now reached a level where that magnitude of decline is plausible.

Monday's Market 10/13/2014

Thursday's Market 10/09/2014

It has been an interesting couple of weeks since the SPX hit an all time high of 2019.26 on September 19^th. The decline from that high began innocuously enough, with the index dropping to 1978.63. I am counting this as the first wave of a 5 wave sequence. The second wave unfolded as an inverted corrective wave, 1993.63-1966.22-1986.37-1964.04-1985.17. From 1985.17 the SPX declined sharply to 1926.03 and was followed just as quickly with a bounce back to 1977.84. Another sharp decline followed, this time to 1925.25. This again was followed by another swift bounce to 1970.36 yesterday.

I am counting the decline to 1926.03 as the third wave down from 2019.26, and the bounce to 1977.84 as the fourth wave. This count gives a target of between 1921 and 1907, with an optimal value of 1915 for the fifth wave.

While this could still go in several directions, I am looking for a move lower to 1918+/- to complete wave 3 of E. This should be followed by a bounce, maybe to 1930, and then a final move lower to 1915+/- to complete a 5 wave sequence from 2019.26. There is a chance the advance from there could be surprisingly strong.

Thursday's Market 10/02/2014

It did not take the SPX long to choose between the two paths I described on Tuesday. Wednesday the index opened decidedly to the downside, confirming the inverted corrective wave that terminated at 1985.17. The SPX continued lower from the open, falling to 1926.03 this morning with only two noticeable bounces along the way.

Once the SPX had fallen to 1926.03 by late morning, the first real attempt at a rally from the 1985.17 occurred. The index climbed steadily through the remainder of the day reaching 1952.32 before falling back slightly into the close.

I count nine waves from the 1985.17 high to the 1926.03 low. The first wave ended at 1968.96. The next five waves completed an inverted corrective second wave, 1977.73-1954.30-1964.33-1945.44-1951.10. The next three waves, 1934.82-1938.15-1926.03 then completed a 5 wave sequence.

Recalling the count from 2019.26, the SPX completed the first wave at 1978.63. The index then completed an inverted corrective wave at 1985.17. Notice that the end of this wave, 1985.17, completed above the termination point of the first wave, 1978.63. Sometimes this indicates the completion of only the first wave in an ongoing corrective wave. This may be a possibility in this case, with 1985.17 being a wave a, and today’s 1926.03 low being wave b. The short term count from 1926.03 indicates three waves, which would then complete the entire second wave from 2019.26 at 1952.32. I am now looking for three waves down to complete a 5 wave sequence from 2019.26.

My target for this initial decline from 2019.26 is 1917. This should complete with a move below 1932, a small bounce, and then a final decline to 1917.

If 2019.26 was the end of a sequence from 1074.77, several preliminary targets can be estimated. There a couple of interesting possible scenarios that I will elaborate on as this wave unfolds.  One of these scenarios suggests the SPX will complete this wave above 1881. Should that level be broken to the downside, I would look for a move below 1748.

Tuesday's Market 09/30/2014

It was another up and down for the SPX today. This choppy action has been the norm for the better part of four days, and has been difficult to follow on the short term. I thought it best to focus on the longer term today, and outline the possibilities as they stand at the moment.

Looking at the Weekly chart, I identified 4 waves that completed from 1074.77 to 1560.33, with the SPX needing only to complete the 5^th wave to complete the sequence from 1074.77.

On the Daily chart I identified a complete 5 wave sequence from 1560.33 to the recent 2019.26 high. The completion of this wave at 2019.26 would complete the 5^th wave from 1074.77, and therefore I have been looking at that point as the termination of a 5 wave sequence from 1074.77. Unless the SPX moves above 2019.26 it appears the index is in the beginning stages of a correction of that sequence.

On the 60 Minute chart, the initial decline to 1978.63 looks to be a first wave a sequence lower. From that point, the SPX moved higher to 1999.79, lower to 1965.99, back up to 1986.37, back down to 1964.04, and then made one more move higher to 1985.17. Looking at this sequence gives 1978.63-1999.79-1965.99-1986.37-1964.04-1985.17. The points (1978.63, 1999.79), (1965.99, 1986.37), (1964.04, 1985.17) gives an R^2 value of .99756, meeting the parameters for a 5 wave sequence, and possibly the completion of an inverted corrective wave from 1978.63, or the second wave from the 2019.26 high. If this count is correct, I would expect a resumption of the decline from this point.

My concern with this count is the shorter term counts, which makes it difficult to be certain of this count. After the initial decline from 2019.26, I had somewhat expected a slightly different correction to form, namely a semi-inverted corrective wave, which is still a possibility. If it does occur now, it would actually contain another semi-inverted corrective wave within it. This would look something like this:

If this scenario does play out, the SPX should move up to 1989, pullback with the index holding above 1978.48, and then move above 1999.79, but falling short of new highs. The next few days should give us a good idea of which path the SPX is taking.

Monday's Market 09/29/2014

It was another interesting day, where obviously Friday’s rally did not continue as I had anticipated. Instead the SPX fell sharply at the open, dropping to 1964.04. From there the index rallied in somewhat choppy trading, cutting the bulk of its losses.

Although this wave did not play out completely as anticipated, I am still inclined to believe that this is a convoluted wave Thursday’s 1965.99 low that has yet to complete. My target for this wave is 1997. A move below 1976.76 would invalidate this count. I am also still looking at 2019.26 as the completion of the wave from the 1074.77 low. 

Friday's Market 09/26/2014

It was a fitting end to a rollercoaster week that saw the SPX sell-off Monday, Tuesday and into Wednesday, rally sharply into Wednesday’s close, and then plunge on Thursday. Having completed a 5 wave sequence from Wednesday’s 1999.79 high at the close on Thursday, it was likely that the index would bounce at the open. It did just that, moving higher at the start of trading to 1972.16. The morning was choppy, as the SPX then fell to 1969.16, rose to 1975.69, and then moved lower again in three waves to 1969.80-1974.15-1967.92. The first three moves can be seen as Waves 1, 2, and 3 of a 5 wave sequence higher, and the last three as Waves A, B, and C of an inverted corrective Wave 4. Wave D turned out to be the bulk of today’s rally, as it drove the index higher to 1986.37. That was followed by one more pullback to 1981.07 that   completed Wave E, and thus Wave 4. If correct this would mean a continuation of the rally on Monday, with a minimum Wave 5 target of 1990.

Where this Wave 5 concludes could provide some important clues as to the next larger move. The key price to watch is Wednesday’s 1999.79 high. If this wave terminates below that level, it is likely part of a complex corrective wave from Wednesday’s 1978.63 low. This could take several forms, and possibly conclude between 1999.79 and 2019.26. If current wave concludes above 1999.79, this may be the start of a larger move to new highs. I will try to elaborate on these scenarios over the weekend.

Thursday's Market 09/25/2014

Last Friday morning the SPX touched 2019.26, which almost likely completed a 5 wave sequence from 1560.33, and possibly a sequence from 1074.77, all of which I have been mentioning for several days. It is far too early to call the rise from 1074.77 over, so it remains best to take this one wave at a time. After hitting 2019.26, the SPX declined into Wednesday morning completing a 5 wave sequence at 1978.63. After completing that sequence, the index staged a rally into Wednesday’s close, once again completing a 5 wave sequence at the high of 1999.79. That indicated at least a pullback for today, which turned out to be an understatement.

The SPX dropped precipitously at the outset, dropping to 1970.41. This turned out to be the first wave of a 5 wave sequence that then completed at the close as 1975.79-1966.80-1972.65-1966.56. With a sequence completing today at the low, the SPX should experience a bounce tomorrow. Resistance is at 1969 and then 1977.

Wednesday's Market 09/24/2014

After completing a 5 wave sequence from 2019.26 yesterday at 1982.86, the SPX looked poised for a move to the upside. The index did start off to the upside, moving to 1986.23 at the open. However, the SPX was not quite ready to break out. After opening higher, the index fell to 1980.68. The SPX then stair stepped lower, finally reaching 1978.63. From yesterday’s 1982.86 low the SPX formed an inverted corrective wave at 1986.23-1980.68-1983.80-1980.10-1983.10. Following that the index moved to 1979.06-1981.26-1978.63, completing a higher degree sequence from 2019.26 just above the 1976 target first mentioned on Sunday.

After reaching 1978.63 the SPX did rally sharply. The index ran up quickly to 1985.23, paused momentarily, and then continued higher to 1993.08, where another pullback took the index to 1989.90. The rally continued after that, reaching a high of 1999.79 just before the close, and completing a 5 wave sequence at that point.

With the completion of a 5 wave sequence at 1999.79, the SPX may experience a pullback from here. Support is at 1988, and then 1982. The next resistance level would be 2032. The SPX appears to be at another decision point; either move to new highs, or continue the decline.

Tuesday's Market 09/23/2014

The SPX gapped down this morning to 1986.70. After bouncing to 1995.41 the index continued the decline, falling to 1983.80 before bouncing again. His time the SPX rose to 1988.59 before falling to the low of the day at 1982.86.

The SPX may have found at least a short term bottom at today’s low. From the 2019.26 high the index completed Wave A at 2006.59. Wave B then completed at 2014.08 and Wave C at 2001.75. Wave D was an inverted corrective wave, completing at 1995.99. Today’s action can be seen as Wave E which completed at 1982.86.

I am still looking at 2019.26 as the top from the 1074.77 low. If the SPX is to make a new high, it may do so from here. Resistance is at 1988, 1992, and then 2013. A move below today’s low would signal continued downside action.

Monday's Market 09/22/2014

The SPX started the day by gapping lower, which set the tone for the remainder of the day. After initially falling to 2001.75, the SPX bounced weakly to 2005.49, and then continued lower to 1992.11. Another slightly stronger bounce to 1996.79 followed, but was soon met with more selling pressure as the index fell to the low of the day at 1991.01. The SPX ended the day with a bounce to 1995.99, and then a fade into the close.

Looking at the SPX from the 2019.26 high the index first completed a 5 wave sequence at 2006.59 on Friday. The index followed that up with a completed sequence higher into Friday’s close at 2014.08. These likely are Waves A and B of a 5 wave sequence to the downside. Today’s opening move to 2001.75 and bounce to 2005.49 can be seen as a wave 1 and either wave 2, or A of 2. From 2005.49 a 5 wave sequence completed at 1991.01, for either wave 3 or B of 2. The bounce to 1995.99 is then either wave 4 or C of 2.

This continues to look like an incomplete sequence from the 2019.26 high. It appears that the SPX may move slightly higher from this point. A move to 1998-1999 would complete an inverted corrective wave from 2001.75. That should set up another move lower to the next support level at 1976.

Sunday 09/21/2014

Thursday's Market 09/11/2014

Ever since the SPX fell to 1074.77 in October 2011, the index has moved progressively higher. I have been counting this sequence as Wave 1 at 1292.66, Wave 2 at 1158.66, Wave 3 at 1422.38, and an inverted corrective Wave 4 which ended at 1560.33. Given this structure the minimum target for Wave 5 was 1776, with an optimal target of 2041-2046. The SPX surpassed the minimum target last November.

The Daily Chart shows the progress of Wave 5 mentioned above. Once again four waves of a sequence completed at 1709.36, 1646.47, 1850.84, and 1737.92. In this case Wave 2 was the complex inverted corrective wave. With four waves completed, a target range of 1957-2064 was indicated. From the 1737.92 Wave 4 low, Wave 5 then tracked fairly well into July when the SPX reached 1985.59. Wave 1 of 5 looked to have completed at 1882.35. Wave 2 of 5 then looked to be forming a complex corrective wave. Waves A, B, and C of this wave completed at 1814.36. A 5 wave sequence higher then followed which formed Wave D of 2. At this point the SPX seemed to vary from the script, as I was looking for a move lower to complete Wave E, and thus Wave 2. The lower limit of this wave projected to 1937. When the index fell to 1955.59, and then started to move higher, it looked like Wave 2 of 5 had completed. The short rally to 1991.39 was difficult to follow, and the subsequent drop to 1904.78 complicated things further. The best count for this is that Wave 2 of 5 did indeed complete at 1955.59. Waves 3, 4, and 5 of 5 then can be counted as 1968.84-1981.27-1991.39.This would mean that Wave 4 was also a complex corrective wave. This is rare, with usually only one of the corrective waves being complex, but something that is sometimes seen at the end of higher degree waves. With a 5 wave sequence completing within the target zones, it seems likely that the sequence from 1074.77 completed at 1991.39.

With the SPX having made new highs since then, the above statement seems a bit absurd. However, there are at least two scenarios in which this makes sense. First, either the wave from 1560.33 is extending, or the sequence from 1074.77 is extending. What I see as more probable is that the sequence from 1074.77 completed at 1991.39, and now the SPX is forming a complex corrective wave.  The decline from 1991.39 to 1904.78 counts as a 5 wave sequence and is likely the first wave of the corrective wave. Wave 2 is now underway, and has carried the index to new highs. This will likely form a semi-inverted corrective wave. After this wave higher completes, the SPX will likely move lower, finding support between 1991.39 and 1904.78. Eventually this sequence should complete below 1904.78.

The sequence from 1904.78 so far looks like a Wave 1 completed at 1944.90, with Wave 2 an inverted corrective wave that completed at 1982.99. A preliminary target for this wave is above 2031, but a more accurate target should be able to be calculated soon. There is a possible count that shows 2011.17 being the top of this wave, and a move below 1981 would likely confirm that.