First, I want to address the wave count. In the SPX, the high today seems to have been made on a 3-wave structure. Therefore, I am adopting the following wave count, wherein we may almost be done with wave iv.
I am assuming that today’s high was actually a b-wave, with today’s decline a c-wave. And, that can actually complete all of wave iv.
But, of course, we will need to see a CLEAR 5-wave impulsive rally off this support to suggest that our next target is going to be the 3971-4015SPX region to complete wave v of [iii].
This now brings me to something I noted on Friday, and is well worth repeating today. We have completed the high probability segment of the rally off the recent lows. And, I see no real compelling reason to take further risk on the long side.
The market has not yet proven itself with a full 5 waves up off the low. And, we still have no indication that support is going to hold. Moreover, even if we do see the rally in wave v of [iii], wave [iv] will likely bring us back down towards the region wherein we have found ourselves over the last few days. So, again, I see no compelling region to take the risk on the long side of the market at this time.
There are times that it may be best to remain a spectator and let the bulls and bears fight it out in this important region. And, based upon the market context provided to us through our Fibonacci Pinball structure, I think this may be one of those times.