Did We Bottom In All Of Wave 4?
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Overnight we saw the market move higher followed by a continued sharp move higher today. The move saw very few retracements as the SPX broke over the previous high at the 5058 level. We are still trading near the highs as of the time of this update and with the breakout, we have certainly opened the door to a direct push towards the 5155-5313 upper target zone as we have been watching on the 60min charts. While the move to new highs has certainly opened the door to a direct push to those levels there are some issues in regard to how this move bottomed yesterday which is still leaving the door open to another swing lower before I can say with confidence that the wave 4 is completed.
As I noted yesterday to count the wave 4 as complete we would likely have to count the low yesterday as a truncated wave (c) as part of that wave 4. This is problematic as it is far from a standard or ideal wave structure. So for that reason, I am still going to leave the door open for this push higher, even though we have exceeded the previous high, to be a wave (b) of the larger wave 4. I am showing this path in red.
With the break however, I do have to let price ultimately dictate the count and should the pullbacks lower remain corrective in nature then it would suggest that we have indeed bottomed in all of the wave 4 and are heading directly higher towards the upper target zone in the 5155-5313 zone to finish off the wave 5.
If however, we see a five-wave move to the downside it would open the door for this to see a move lower in the wave (c) of 4. Under that case, I would once again watch support at the 4891-4855 zone below.
So while the breakout is certainly a good start to see a larger push-up to the target zone we still have a bit more work to do to confirm that we will see further follow-through. I think we should know which path this is going to ultimately take over the next few trading sessions.
