With the SPX moving through 2742SPX this morning, they have taken the best immediate downside set up for the bears off the table. While this does not mean the bears cannot come back out swinging tomorrow, the move through 2742SPX has left us with only a very malformed d-wave potential, if the purple triangle count is going to be applicable.
As we outlined over the weekend, the next hurdle for the bulls is the 2753SPX level. If we see the market move through that level, then it certainly opens the door up in the yellow count in a much greater way, especially if we can complete 5 waves up towards the 2800SPX region to complete wave 1. Remember, we need to see a fully formed impulsive count to confirm that the triangle has completed, and we are not quite there yet.
As we have also outlined over the last several months, there is still one last potential the bears have should we head higher from here. That would only become a higher probability if the market completed 5 waves up directly into the 2823SPX region. I have outlined in the past all the bearish confluence located within that region. And, if this rally stretches all the way to the 2823SPX region, then it would make me a bigger believer in the fact that this rally is part of a larger degree (b) wave, which can still point us down into the 2400’s in the SPX.
But, we are quite far from the bearish potential of a rally into 2823SPX right now. As of my writing this update, as long as we remain below 2753SPX, the bears still have some dry powder to be able to push us down in the e-wave of the purple triangle. However, as move through 2753SPX at this point certainly opens up the door to the bulls to take this market by its horns, and set us up to rally to 3000 sooner rather than later.
Lastly, I know I sound like a broken record, but the greater probabilities still suggest we will rally to the 3000 region. What we are attempting to do in this overlapping wave structure experienced over the last several months is to determine from where that rally is going to take hold.