Bulls Are Running Out Of Room

With the RTY being unable to capitalize on its micro upside bullish set up, we clearly have to remain on our toes in the market for the rest of the week.  Yet, we are still over support, and upside patterns still remain on the chart.  But, the bulls are running out of room.

As I have reiterated many times this week, the 3115SPX and 138.60IWM supports are the key points for me to still consider higher levels within the blue wave structures I have presented on the charts.  A break down below those regions would be an initial signal that a drop towards the 2900SPX region has become much more likely.  But, until those supports actually break, we still retain bullish patterns to higher levels.

Keep in mind that in a Fibonacci Pinball structure, the market strikes the 1.00 extension for wave [iii] of 3, which is what we have done thus far in SPX, and then pulls back towards the .618-.764 extension.  The .618 extension is in the 3115SPX region, which is why that is important support for me in the near term.  If the market fails to hold that support, it is an early warning that a Fibonacci  Pinball structure rally is likely going to break down, which is why the probabilities begin to strongly swing towards the green count at that point in time.

If the market intends on actually testing that support, the ES presents us with a micro count needing a c-wave decline towards that support to complete blue wave [iv] within wave 3.  Should we rally over today’s micro b-wave high, it can put a more immediate bullish spin on the current action.

Moreover, with the RTY failing to follow through on its immediate bullish set up, I have to view the count as shown on the attached 5-minute chart.  It still suggests that as long as we hold over the 138.60 region of support in the IWM, we have a i-ii upside structure presented in blue. 

So, for now, I still do not have any clear structures pointing to an immediate break down in the market below our support levels.  But, should those support levels break, it would strongly suggest that the blue count is heading to the back of the line, and I will expect a retest of the 2900SPX region support in the coming days.   

5minES
5minES
5minMicro
5minMicro
60minSPX
60minSPX
60minIWM
60minIWM
Avi Gilburt is founder of ElliottWaveTrader.net.