After finishing yesterday's down day in decidedly oversold territory, they market started with a bang today. A gap up opening took SPY to 402.20 within the first half hour. That initial enthusiasm soon faded, as SPY then tracked down below yesterday's low to 396.35 just after noon. After that the market regained it's footing and rallied back near the opening high to 401.62, before selling off slightly at the close. It fell back near the 400 level at 400.41 before closing at 400.64.
When the market opened higher above the 402 level, it looked like we were on our way to the 407 - 412 area I mentioned yesterday. But the decline below yesterday's low took care of that in a hurry. The start of this wave from 418.31 was choppy, and so several counts are possible. One such count I outlined above, as the February 14-16 action can be counted as A-B-C of an inverted corrective wave. Today's opening move higher was Wave E and the decline then finished Wave D from the 14th. The conservative count from here still calls for a move to 406 - 411, followed by another move lower, probably below 396.
A second count would call for a move back down to the 396 level from here, before commencing the rally to the 406 - 411 level. A third count points to today's low as being the completion of a 5 wave sequence from the 418.31 high.
The 402 area has proven to be a resistance area, and you will notice that many of these wave options see that as a significant point. The same can be said for the 396 level. The 406 - 411 level seems to be the next area of interest. If that level holds, a move down to 396 looks probable. A break above that level could point to today being the end of the 5 wave sequence.
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