Market Teases Both Sides Today As We Wait For Resolution

Today we saw the SPX hold under key resistance and move sharply lower in the morning session only to hold over the previous low and make a strong recovery into the end of the day. We are currently testing the upper end of the resistance zone for the potential micro fourth wave and should we see that resistance taken out to the upside then we likely have put in at least a local bottom with the low that was struck on 9/6. If however, we manage to hold that level and turn back lower on five waves then the door remains open to still see yet another lower low to finish off the fifth wave as part of the larger five wave move down off of the highs. 

Drilling down to the 5min SPX chart I have resistance for the wave iv shown in green at the 5524 level. If the market is able to see a sustained break of this level then it makes it more likey that we have put in at least a local bottom with the low struck at 5397. If we do break higher then we would need to see a full five wave move higher to suggest we are going to move directly to new high as shown in blue. If however we break over 5524 but only see a three wave follow-through then we still can see this form a wave (b) top shown in purple moving lower for a wave (c) of larger b before seeing any further upside action. 

If we manage to hold the 5524 level and turn down on five waves then we still have the potential to see this form a full five wave move down off of the highs as shown in green. From there we would look to see a corrective three wave move back for a wave 2 while holding under the 5652 high before turning lower in the larger wave 3 down. 

So while there are still several paths that this can take we should have an answer in the next couple of trading sessions as we are simply running out of room for the market to continue to drag its feet. So from here it really is simply a matter of waiting and watching to see what the market intends to do in this region.