Market Fails To See Upside Follow Through

After opening lower today the market failed to see any sort of upside follow-through and has remained near the lows for most of the day. We are still trading over the 5256 low so technically speaking we still can consider this in a micro wave (2) retrace as part of the larger wave v. The depth of the retrace and inability to see any upside action is making it much more likely that we will see at least another lower low under that 5256 low. We still have the question as to what count we will be in should we indeed move lower. 

Assuming we do indeed see a break of the 5256 low then I will be watching first to see if we can manage to hold the 5223-5182 support zone. If we can hold that zone and then turn back higher it would still leave the door open for this to see another higher high to finish off the wave 5 of (c) of b into the 5337-5383 zone overhead. I would need to see this break back over the 5314 level to give us confirmation of a move higher so there still would be quite a bit of work to do to signal that we are moving higher if we do indeed move into and hold support below.

If we break under that support zone then it would give us further confirmation that we have indeed put in a larger degree top in the wave b. The issue that we would be dealing with under that scenario is the structure of the move down off of the highs. We would likey be dealing with a leading diagonal down off of the highs under that scenario. That is far from the most reliable pattern but if we do indeed break support that is how I would most likely count the move. 

So for now while the failure to see upside follow-through is certainly making it more likely that we will see lower levels we still have to see how this reacts as we move into support before we will have further confirmation that we have indeed topped. Until that occurs I will still remain patient in the shorter timeframes but the bigger picture I still remain very cautious in this region.