Has The Market Put In A Local Top?
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After trading flat most of the session we saw the market turn down as we approached the final hour of trading giving us an early signal that we may have put in at least a local top.
We are still trading over upper support at the moment however and that support will need to break to give us further confirmation of a top.
With that being said given the oversold nature of the technical indicators on the 60min chart along with a fairly deep drop in the Russell 2000 caution is certainly warranted in this region.
The SPX turned down right at the 100 ext at the 4294 level of the wave i up off of the 5/24 low giving us an early signal that we have put in a local top. We have also begun to roll over on the 60min MACD after seeing the MACD move up into the oversold region in which we have seen many local tops over the past several months.
We are however at the time of this writing still holding over the 76.4-61.8 exte of that same wave a of iii and we would need to break under that zone to give us the next signal that we have indeed put in a local top. That support zone comes in at the 4265-4235 zone and moving back under this zone would suggest that the wave iv is indeed underway.
Once we confirm that top in the wave iii then the wave iv support comes in at the 4232-4196 zone as long as we can hold that zone we should push higher for another wave v of 5 of (c) of b as shown on the 60min chart.
If we are unable to hold that 4196 level and follow that up with a break under the 4104 level then it would be an early signal that we may have put in a larger degree top and potentially a top in all of the wave b as shown in red on the charts.
As long as we hold support I am still leaning towards this seeing another higher high to finish off this move however caution is certainly warranted in this region as we are now entering the larger degree-topping zone for the wave b which should be followed up with a larger degree c wave that will ultimately take us down to new lows under those that were struck in October.
