Further Consolidation - Market Analysis for Jan 9th, 2017

With the market not gaping higher today, it strongly suggests that the high struck on Friday was the top of a leading diagonal for wave (i) of v of 3.  While we have the minimal waves in place for a wave (ii), I think the structure may suggest we could see further downside into tomorrow.

At the end of the day, the only thing this consolidation does is open the market up to higher potential targets for wave v.  The minimal target for wave v is still the 2330SPX region, but this bigger (i)(ii) structure can take us up to the top of the target box in the 2373SPX region. 

If tomorrow provides us a gap up through Friday’s high, then I am going to assume that this wave (ii) is done.  However, I think we may see further consolidation, but it is not something I would “bet” on.  As long as this market remains over 2245SPX, it is set up to break out over 2300SPX next.  The only question we have at this time is how deep this wave (ii) can take us. 

As noted over the weekend, it would take a break of 2245SPX to make me question this perspective.

Avi Gilburt is founder of ElliottWaveTrader.net.