With the market being unable to exceed the 4080 resistance on the S&P 500, even in the overnight session (although it did just about test it), we are now getting what I think is the 5th wave down in the c-wave of wave iv.
If you remember, I have outlined many times how waves iv and i usually overlap in diagonals. But, with the size of what may be a wave iii in this one, I did not think it was terribly likely that we would see overlap in this structure. The market may be proving that wrong right now, as we seem to be heading towards and overlap with wave i, which topped just below 3946 SPX.
Now, if you take a look at the 5-minute chart, you will note another annotation. The main point of this annotation is to highlight that the bulls are going to have to step up in what should be the last leg in this decline and hold over the 3912 SPX region. As I have mentioned before, once a 5th wave starts to exceed the .618 times the size of the first 3 waves, then it starts suggesting that it may not be a 5th wave. And, when it breaks beyond the .764 size of the first 3 waves, then it is clearly not likely a 5th wave. In our case, that means that a break down below 3910/20 could suggest that this entire decline is a bigger a-wave in the red a-b-c structure to lower lows. But, we still have some room before we have to worry about that.
In the meantime, the 5-minute MACD is sporting a very nice positive divergence to indicate that the market is attempting to bottom. Moreover, the 60-minute MACD is now deep into its support region. So, I think there are many factors that are suggesting the market is trying to bottom in the c-wave of wave iv.
In order to begin to suggest that a bottom has been struck, we need to see the market break out over 4010, and then follow through over 4030. This would be a strong indication that the a-wave/alt[b] rally is under way. And, remember, it will not likely be a 5-wave structure, but more likely an a-b-c structure.
So, the market has defined its parameters, and its now time for the bulls to step up if there is going to be any indication that a higher high to complete a larger 5-wave structure off the June low is in the cards.