Market Continues To Push Higher, But We Are Still Not Out Of The Woods
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Today, the market continued to push higher, and we can now reasonably count the move off the lows as a five-wave structure. This increases the probability that a bottom has been put in for wave (a), and that we are now progressing within a larger wave (b) to the upside. That said, we have not yet cleared a key resistance region on both the SPX and the Nasdaq, which keeps the path to another low very much in play. In addition, the Nasdaq still lacks a clean, completed structure to the downside, which adds another layer of caution and further supports the possibility that another lower low could still develop.
Looking at the ES chart, price topped today at the 6653 level, just below the key resistance level at 6684 and right at the upper trend line. So while the move off the lows can be interpreted as a five-wave structure, increasing the odds that a bottom is in place, confirmation is still not in place. Until we see a sustained break over resistance, followed by a move through the 6765 level, I will continue to allow for the alternate scenario, the green count, which still points to the potential for another move to new lows.
Complicating matters further is the structure of any potential pullback. Even under the bearish (green) count, the next move lower would likely begin as a three-wave decline. This means that if we do see a retracement from current levels, it will not immediately confirm direction. Instead, we will need to closely monitor the structure of the subsequent move off that pullback. Only a clear impulsive advance, followed by a break above today’s high, would provide stronger evidence that the market is indeed heading higher. Until then, attempting to trade a pullback from this potential five-wave move carries added risk.
The lack of a completed structure on the Nasdaq only reinforces my caution in this region.
So while the primary view remains that a bottom has been established in wave (a), I will remain measured in this region. Confirmation requires price and structure and until resistance is clearly broken, I still cannot remove the green count from the charts.
