My primary count has maintained that the pullback which bottomed on Friday is a wave iv, with the potential for a wave v higher high to be seen into next week. However, with the manner and depth we have dropped today, it does bring that into serious question.
For now, as long as the market remains over 2057.50SPX, the market retains the potential to head up to at least the 2116SPX region for a wave v taking us into next week. However, should we break below 2057.50, it makes it much more likely that the market has topped, and our primary count will turn to us being in wave (2) – the yellow count, with the alternative that a larger wave iv is in play. But, I would not give that alternative more than a 15-20% potential if we break the 2057.50 region.
So, my expectation is that the market will likely make a decision by tomorrow. If we move into the yellow count, we can target regions that are 100 points or more lower before it concludes. And, even if we do make the higher high, I still think we see those levels for a wave (2) anyway. This is the reason I said in my weekend update that my focus will be on the wave (2) if we make a higher high or not.