Door for more near-term downside has been opened

The market finally saw some decent movement today, eventually breaking below last week's low to confirm only a corrective bounce into yesterday's high, and no longer leaving us with a clear setup for further immediate upside.

Therefore, we have to adjust our expectations now to allow for more near-term downside instead, which I believe can take price back to at least re-test the June 9th low at 2416 SPX. If price manages to hold that support, then our standard impulse count off the April low shown in red can still remain valid, just with a larger irregular flat for wave iv of (iii) off the June 9th high.

However, based on a number of other charts that I track, I see the potential for even more weakness than that. Instead, I think it is possible to count a 1-2 down from last week's high within a larger c-wave, where price is now beginning wave 3 of c shown in blue. If that is the case, then the 2416 SPX signal level would likely break, and the 50 day SMA at 2407 SPX would be the next target before another corrective bounce in wave 4 of c.

Therefore, I still expect to see more near-term downside tomorrow that should take us to at least 2416 SPX, and based on how price reacts there it should determine if we are following the blue or the red path.

$SPX - Micro - Jun-27 1227 PM (1 hour)
$SPX - Micro - Jun-27 1227 PM (1 hour)
Garrett Patten is a senior analyst at ElliottWaveTrader covering both U.S. and international equity indices as well as stocks.