With the market providing us with an overlapping structure for 3 weeks now, it has not provided us with any smaller degree clarity as to its next directional move. While my preference remains to see more of a pullback, I really do not have a clearly defined set up to which I can point with confidence.
So, it reminds me of something Frost & Prechter noted in The Elliott Wave Principle:
“Of course, there are often times when, despite a rigorous analysis, there is no clearly preferred interpretation. At such times, you must wait until the count resolves itself. When after a while the apparent jumble gets into a clearer picture, the probability that a turning point is at hand can suddenly and excitingly rise to nearly 100%.”
So, with the picture rather unclear in the micro structure, and unable to clearly define yet how deep this pullback will take us, I will try to outline the details as to what we know from an EW perspective in this update.
But, for those that do not desire to hear the details, I will summarize it as follows: Support is now at 3540-60SPX, with resistance now at 3680-3700SPX. As long as we remain over that support, and then break out through noted resistance, then we are likely in wave 3 of  of [iii], and on our way to 4200/4300SPX. Should we break below 3540SPX, then we have an initial indication of the bigger wave  pullback.
Now, for those that are interested in the EW analysis, let me start with the triangle to which many are pointing. As I have noted many times before, I do not think we will see a triangle in this region. You see, I have NEVER . . and I want to repeat NEVER seen a 2nd wave triangle. In fact, Frost & Prechter also note that 2nd waves are not formed as triangles.
However, there is a way we do see a triangle within a 2nd wave that can fit this circumstance, but it is quite rare. It is where we have a w-x-y pattern for a 2nd wave, wherein the y-wave takes the shape of a triangle. And, I have outlined that “generally” on the attached 5-minute SPX chart in red. But, it would mean would be stuck in the y-wave triangle for the next week or two as we consolidate within a triangle pattern over the 3540SPX support. But, again, this is relatively rare, so it is not something I am considering just yet. But, I wanted to at least address the triangle question that many have, and provide another option within that potential.
With the overlapping structure we have seen for most of November, I can view this structure as a completed diagonal. Yet, it did not make a higher high thus far, so it is hard for me to rely upon an truncated 5th wave ending diagonal. Again, this would be a rather rare occurrence. Yet, if the market were to rally over the 3680-3700SPX resistance noted on the 5-minute chart, I would have to take this 1-2 in green much more seriously, and strongly consider that we are in wave 3 of  of [iii]. But, again, as it stands right now, I cannot consider this a high probability.
The other potential is that the market has not yet completed wave alt  or 1, and still needs to push higher towards the 3680-3700SPX region to make a higher high. But, again, I do not have a lot of confidence in that pattern either, as there is nothing within the structure to suggest this is a strong likelihood. But, there are other charts that are suggestive of one more push higher before a real pullback is seen. So, I am certainly keeping this on the radar screen for right now.
There is also potential that today’s high represented a [b] wave within the wave , and that is outlined in blue on the 5-minute SPX chart. I cannot say that I have a lot of confidence in that potential either since the market has not dropped off the high within a clear 5-wave structure. While it can certainly develop as an ending diagonal, that is not what I would consider a high probability at this juncture.
So, as you can see, the market has left us with a significant lack of clarity in the micro structure. Again, my preference remains to see a standard pullback to at least the 3400-3500SPX region at this point in time (which is the blue box as slightly raised to account for an [a]=[c] potential in blue), I do not have a clear pattern just yet upon which I can rely with a higher probability. Rather, I can simply restate my preference for a standard pullback until the market proves otherwise with a break out over the 3680-3700SPX resistance point.
I am quite certain that the market will eventually provide us with clarity in the coming days/weeks, but I simply do not have anything upon which I can sink my teeth and suggest as a higher probability pattern expectation. Rather, I am going to maintain a primary expectation for more of a pullback to take shape until the market proves otherwise.
So, while I will attempt to answer your questions, I am sorry to tell you that the market is simply not providing me with any smaller degree answers just yet. Simply stay focused on the fact that this a bull market which likely has several more years to run, and focus on the individual stocks on your “buy” list during this consolidation/pullback as the market sets up its next bullish rally to 4200/4300SPX into 2021, on its way to the 5000 region as we look towards 2022.