With the break of 2987SPX, we have initial indications that the market has potentially topped. In fact, I may even be able to identify a 5 wave decline off the highs. While it is not as clear as I would normally like, I can make an argument for it right now.
That means that the rally we experienced today was the start of wave ii, an expectation that I outlined before the rally began earlier today.
Ideally, today’s rally was only the a-wave of wave ii. That means I would like to see some downside movement in the futures tonight, which lasts into the open to give us our b-wave pullback. Thereafter, we can follow through back to the upside with a c-wave, which would fill in a really nice wave ii corrective structure, and provide higher confidence that we are about to see a sizeable decline, which would point us towards the 2900SPX region should it follow through in a full 5-wave structure to the downside.
Moreover, should we complete the wave ii as shown, and then complete another 5 waves down in wave (i) of iii as shown, then wave (ii) is an ideal shorting point, with stops placed at the top of wave ii.
But, I have now given you the “ideal” structure I am tracking. The market does not always give us the ideal structure. And, any deviation from this potential would keep me on my toes. But, needless to say that a break down below today’s low will open the door to provide us the confirmation we desire with a break down below 2950.
That means it may take a bit more patience until we are able to obtain the confirmation we seek that a top has indeed been struck.