Market Grinding Lower, but Still Holding Key Support
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The market continued to drift lower today, but the character of the decline remains overlapping and relatively slow in velocity. This type of price action continues to suggest we are dealing with a corrective pullback rather than the start of a larger impulsive Wave (c) to the downside.
The primary question at this stage is not direction, but depth, how far this corrective move will carry before the market attempts to resume higher.
As long as we remain above even the upper support pivots, we simply do not yet have enough information to resolve that question. The parameters outlined in yesterday’s update remain largely intact. That said, I have added an additional alternate count, representing the most immediately bullish scenario currently on the table. While I will outline the parameters for that path, the market still needs to provide further price development before we can assign higher confidence to any one outcome.
As noted previously, 7079 remains the first key downside pivot. A break below this level would increase the probability that a local top is in place. However, even with a break of 7079, I cannot rule out the possibility that the current pullback is a larger Wave iv within the initial five-wave advance off the April lows. For now, that remains an alternate scenario.
Until we see a break below 6941, that alternate must remain viable. A sustained move below 6941 would provide stronger confirmation that a larger-degree top is in place. From there, as long as the decline continues to present as corrective, the expectation would be for a larger Wave 2 to be developing. However, should the market begin to accelerate lower in an impulsive manner, it would open the door to a larger Wave (c) decline.
I have also added a yellow count, which represents the most immediately bullish path. Under this scenario, the market would be tracing out a Wave (ii) within a larger Wave v, potentially targeting the 7350–7450 region before completing the broader advance off the April lows.
That said, this count does carry some structural concerns, namely the proportionality at higher degrees and the potential reliance on a leading diagonal, which is generally a less reliable pattern. For those reasons, it remains an alternate for now. However, as long as the market holds above 7111, this path remains viable and will continue to be monitored, particularly if we see a strong breakout to the upside without first breaking lower.
For now, patience remains key. We still require additional price action to clarify near-term direction. The benefit, however, is that the impulsive structure off the April lows provides us with relatively well-defined parameters, something that is often lacking when navigating purely corrective environments.
