May See A Change Of Plans
With the way the market is reacting today, there is an alternative I have to bring to your attention.
While I was initially viewing the market as having the potential to extend towards the 5900SPX region for the potential wave [1] in the more bullish green count, or the wave V in the yellow topping wave count, the structure we have experienced today may be providing for a topping a bit sooner and lower.
Just to remind you, the more bullish path I was tracking is presented on the 5-minute ES chart, and suggests that as long as we hold today’s low, then I am looking up to the 5861ES region for wave 3 of [iii] of iii of [1], which would then make the pivot our new support should we get there in a more direct fashion. Ultimately, this pattern would be pointing us to the 5900SPX region.
However, due to the manner in which the market is acting today, I have to now bring your attention to the potential that the rally which began off the 5674SPX level is actually taking shape as a diagonal. I have presented that path on the 5-minute SPX chart, and it would become highly likely should we see a sustained break-down below today’s low. Such a break-down would be wave iv in the diagonal, and I have added the target for this diagonal in the blue box in the 5813-5844SPX region.
But, this also means we will have potential for the market to be striking a major top a bit sooner, as the wave V potential drops back down to the original target we set weeks ago in the 5840SPX region. The question will be if we see a corrective pullback that holds over 5674SPX or not after we complete this rally. Should we see a corrective pullback that holds over that support, and the market then provides us with a 5-wave rally off that corrective wave [2] pullback, then we are going to be targeting 6000+ in the coming month or two.
However, if the market breaks down below 5674SPX after completing this rally then that is our first signal that a major top has potentially been struck. So, clearly, you need to have this consideration in your mind as you consider your positioning in the coming weeks.