As we went into Tuesday's trading session, we were awaiting some resolution to the two counts I discussed over the weekend. A move above 411 would likely mean a 5 wave sequence had completed Thursday at 392.33. A move below 392 would mean a continuation of the move lower from 418.31.
Tuesday saw a sideways opening, before moving decidedly lower following statements from Chairman Powell. SPY tested the 400 level after those remarks, falling to 400.51 before trying to rally. After moving slightly over the 403 level, SPY once again moved lower, this time breaking through the 400 level momentarily before trying to rally again. This time the rally fizzled at 402, and SPY fell to 397.63 before trying to rally into the close.
This morning saw SPY trying to find some stability, trading mainly between 398-400 until after noon. The 400 level is providing some resistance, and having failed to regain that level, SPY dropped lower to 396.62. A late afternoon rally found SPY once again moving towards the 400 level, but failed once again, closing out the session at 398.92.
Nothing that has happened over the past couple of days has changed our count. I continue to look at the 411 level on the upside, and the 392.33 low for an indication of which direction the market has chosen.
Shorter term, SPY may have put in at least a temporary low at today's 396.62 level. A short term count has SPY completing Wave 1 of a sequence from 407.45 at 406.23. The rebound to 407.38 off that low formed Wave A of an inverted corrective wave. Wave B of that sequence provided the most damage, carving out a lengthy 5 wave sequence that ended this morning at 396.83. The choppiness this morning completed Waves C, D, and E, to complete Wave 2 from 407.45. The late day swoon to the low of the day finished out the sequence at 396.62.
The rally off that low came in three waves, which may be the start of a move higher, or simply a respite from the past two and a half days of selling.
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