Is 4 Done?

Over the weekend, I was questioning whether wave 4 was done on the 5-minute SPX chart.  And, based upon today’s action, I am leaning towards it not being done.

Most specifically, today’s we topped out on what seems to be a 3-wave rally.   So, I am viewing that as the b-wave of wave 4.  We have since seen what looks like a 5-wave decline in the SPX off the high.   Therefore, I have to assume that we have begun the c-wave down.  

At the time of my writing this, I don’t think I have enough information to determine how deep this c-wave will take us.  But, I am assuming it should take us at least to the lows struck in the a-wave.   Of course, I would much prefer to see a deeper c-wave that could take us to the support box below.  But, I have no clear indications of that potential at this time.

The one issue I have with too much more of a pullback is that we may be completing a potential c-wave of wave 4 already in the NQ.  So, I am not quite sure how deep we will pullback in other areas of the market.

The other alternative I have to consider is that the 5^th wave in the SPX is taking shape as an ending diagonal, which means we are just about done with the pullback with a little lower in SPX, wherein it can then be classified as just an a-b-c pullback within the diagonal.  Therefore, if we break out over today’s high, then it clearly places us in a diagonal for wave 5.

So, my point is that I don’t think we can get too bearish just yet, as the patterns we have been tracking do not seem to be complete, and are still likely pointing higher before we can then gauge the nature of that top we will likely strike, as I have outlined many times in prior updates.