Just More Overlap - Market Analysis for Dec 16th, 2025

As I posted earlier this morning, while the overnight session initially followed through on the downside set up, the rally off the overnight low provided overlap which made the downside set up much less likely as a standard impulsive (c) wave.  And, when the SPX opened and spiked the 6800SPX level, only to spike back over it again, it was a warning that the cash index was likely to do the same.

Based upon the preceding points, I cannot say as confidently that this will continue in a direct fashion down to the 6700SPX region and the .500 retracement region.  In fact, there is some potential we can even bottom at the top of the support box, which we are striking as I am writing this update.

Yet, the bigger picture is still basically the same.  The next rally will likely tell us whether this (b) wave pullback is done and the (c) wave to higher highs has begun, or if we are only setting up for another decline for a deeper (b) wave into the support box.  Again, if the next bounce is clearly impulsive, then we have to assume that we are in wave 1 of the (c) wave, ultimately pointing to new highs.   But, if that rally is corrective, then we have to prepare for a deeper decline into the support box.

Overall, I am still not seeing any strong indications that the high has indeed been struck.  Rather, the action thus far leaves the door wide open for one more push higher to new all-time highs.  And, should we see a clearly impulsive 5-wave rally, then we have a strong indication that this rally to new all-time highs has begun.