Market Fails to Give Us Convincing Evidence That It's Ready to Break Higher
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Today, we saw the market rally higher, keeping the path alive to see another higher high. However, we have since retraced back lower at a fairly key level, which is giving us further evidence that we are indeed working on the yellow wave b and will see lower levels before breaking out to new highs. On the smaller-degree timeframes, this would look better with a very small push over today's HOD to finish off the wave v of (c) of b in Ending Diagonal form, but the rejection right at the 61.8 retrace certainly is a warning sign that this may be topping sooner rather than later.
From here, on the smaller timeframes, I would want to see a five-wave move to the downside to give us an initial signal that we may have topped in the yellow wave b, followed by a break under the 7755 level. If we get that, then it would give us further confirmation that we have topped in the yellow wave b, with final confirmation coming with a break under the 7676 level.
If we are able to hold over that 7745 level and push to one more higher high over today's HOD, then we may have a completed ED on our hands, which would likely result in a sharp reversal lower. In either case, I simply do not see a clean pattern in place that is highly suggestive that this is ready to break out to new highs, and given the potential ED pattern that is on the board, caution is certainly warranted on the long side.
