Tuesday's Market 07/08/2014

The SPX continued the decline that began yesterday, gaping down at the open, and then continuing lower to 1962.59 without a meaningful bounce. After moving up to 1966.08 the index chopped lower, falling to 1959.46. A more substantial bounce to 1967.56 followed, with the SPX then fading into the close.

From last Thursday’s 1985.59 high it is now possible to count a 5 wave sequence to today’s 1959.46 low within the range needed to complete the next higher degree wave. This count can be seen on the 5 Minute chart. The SPX first completed a 5 wave sequence at 1974.88, which was followed by an inverted corrective Wave 2. Waves 3, 4, and 5 completed in quick succession, with Wave 5 completing at 1959.46. A move below 1959.46 would indicate there is further downside to this wave, but I see the lower limit of this decline 1937.

Looking at the wave count on the 60 Minute chart, it appears that the SPX completed a 5 wave sequence from 1814.36 Thursday at 1985.59. Wave 1 completed at 1884.89. Wave 2 was an inverted corrective wave which completed as 1850.61-1891.33-1862.36-1955.55-1925.78. Wave 3 then completed at 1968.17 and Wave 4 at 1944.69. After the completion of Wave 4, it was possible to calculate the range in which Wave 5 should complete. This range is between 1972 and 1994, so Thursday’s 1985.59 fits nicely as the Wave 5 top.

The 4 hour chart shows that the 5 wave sequence from 1814.36 that completed on Thursday was Wave D of an ongoing inverted corrective Wave 2 from 1882.35. The current decline is thus Wave E of that inverted corrective wave. If the decline is over, the SPX should now go on to complete Waves 3, 4, and 5 to the upside. This would complete Wave 5 from 1560.33, and complete the sequence from the October 2011 1074.77 low. With 4 waves from the 1560.33 low completed, the Wave 5 range can again be calculated, and yields 1957-2064 as my current target.

Since this market has been so resilient, and seemingly unwilling to make any sustained move to the downside, I will continue to monitor it one wave at a time.

Monday's Market 07/07/2014

Thursday's Market 05/22/14

After some hesitation, the SPX broke through the 1892-1894 I have been mentioning, albeit without much conviction. As I talked about yesterday, this likely means a longer duration move to complete the wave from 1074.77. Due to that breakthrough, it appears there are still several waves to go, although it may remain choppy throughout. My minimum target remains at 1957.

The day started slightly higher, but the SPX quickly reversed and dropped to 1885.39. The index rose steadily from that point, hitting 1992.20 before pulling back to 1888.29. The SPX then turned once again, climbing steadily to 1895.96. The index then traded in a narrow range through the afternoon, hitting the high of the day at 1896.33 before slipping into the close.

It looks like the SPX completed a wave 1 from yesterday’s 1882.12 low at the open hitting 1888.80. The dip that followed was wave 2, and the rise to 1992.20 wave 3. The drop to 1888.29 was the wave 4, and the rally to 1895.96 completed wave 5. The SPX then moved lower in three waves. Looking at the SPX from Monday’s 1886.00 high, I had counted the move to 1882.12 as an inverted corrective wave. It now appears that this was only wave A of the corrective wave, with wave B completing at 1895.96. The three waves lower then completed waves C, D, and E, and Wave 2 from 1886.00. The slight move higher from that point unfolded in three waves, and looks to have completed a 5 wave sequence from 1862.36 as 1886.00-1893.27-1895.97-1895.11-1896.33.

This market may continue in a somewhat choppy fashion until it completes, but with several waves left to complete, the potential for a sustained move higher have increased. A lot will depend on the next several waves, and how they unfold. With a sequence completing today, a pullback from these levels would be expected. A move lower to 1875 would complete an inverted corrective wave from 1884.89, and Wave 2 from 1814.36. The waves that follow that should tell a lot about how high this market may go.

The SPX is now in that 1891-1902 support/resistance level I have previously mentioned. Next support would be 1875, with resistance at 1923-1928.