Initial signs of bottoming

The market started off initially lower this morning, making a new low on the week as anticipated. Price quickly found support at the minimum expected retrace target of 2691 SPX though, as the .500 retrace. Since then, a decent bounce has formed that has crossed the initial signal level to suggest a possible bottom forming.

The next step toward confirmation is a break back above yesterday's high at 2747 SPX. If price is able to manage that, then I will be looking for new highs again as either the start to blue wave iii of an ending diagonal 5th (which is my operative count right now), or wave (v) of a leading diagonal off the April low shown in red (alternative count).

Otherwise, if price cannot manage to maintain this bounce and turns back down again to new lows, 2668 SPX remains the next major support below as the .618 retrace and the 200 day SMA.

$SPX - Micro - Jun-28 1225 PM (1 hour)
$SPX - Micro - Jun-28 1225 PM (1 hour)
Garrett Patten is a senior analyst at ElliottWaveTrader covering both U.S. and international equity indices as well as stocks.