As the market continues to machinate within this rally off the lows struck last week, it is doing a great job of shaking the bulls and bears alike. Yesterday, the market smacked the bears really well, and today the market put some fear back into the bulls with a 50% retracement of yesterday’s low.
But, with all of this overlap and back and forth, I cannot say that one side has a decided SHORT TERM advantage over the other just yet. Thus far, the bulls are still holding support, and I have yet to see a solid impulsive structure down off the highs to signal that we have begun a drop to the 2600SPX region sooner rather than later.
With the current structure, I can probably provide you with several potential ways the market can continue to machinate and still point higher. And, until I see a clear 5 wave structure off a top to this rally, I cannot assume that the (c) wave of the a-wave towards 2600SPX has begun.
So, it leaves me with the recognition that the market will remain treacherous as the bulls and bears battle it out within this region. And, until I have a 5-wave structure off a top to this rally, I am unable to yet prepare for that drop down in the (c) wave in the green count. This of course leaves the upside open.
At the end of the day, it is the downside action which will dictate how this region resolves. Until we see a clear 5 wave downside structure, the market may yet attempt to resurrect that blue count. For now, it is still my alternative, as I don’t think we have gone high enough to consider it a strong possibility just yet.