Have We Finally Put In A Local Top?
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Last week, we saw the market finally move lower after a very extended move higher over the past month, opening the door for at least a local top to be in place. Today, we saw further downside follow-through, further opening the door for at least a local top to be in place at last week's high. While we still have some downside pivots that will need to break to further confirm that we have indeed put in a top, the action today, which has been corrective to the upside, is very much supportive of this case.
As shown on the ES chart, I am counting the move down into last week's low as the bottom of a wave a, with the retrace today being either all of the wave b or at least part of the wave b. We will need to see a break through the 7374 low to confirm that we have indeed put in a top in that wave b and are on the way lower in the wave c. Further confirmation will come with a break of the 7340 level, at which point I would expect a sharp follow-through lower, as the move up off the 7083 level likely took the form of an Ending Diagonal.
If we move back over the 7413 level prior to breaking those downside pivots, then we may still see a larger wave b toward the 7500 level, and we still may need to see a larger wave b to the upside. But as long as that level holds, then I still will be looking directly lower.
If we break over the 7500 level, then it would still leave the door open to seeing another higher high as part of the alternate green wave (v). However, at this point in time, that count is looking less probable.
So for now, we simply need to watch the key downside pivot levels to give us further confirmation that we have indeed topped, and then watch the downside structure to help give us further larger degree guidance. But again, at this point in time, the odds of there being at least a local top in place are high.
