As I outlined over the weekend, the manner in which the market rallies off a low will likely be telling. And, if I have to count the low struck today as the bottom of the 5-wave decline off last week’s high, then I am not yet terribly enthused for new highs to be seen.
The question as to whether higher highs can be seen is whether this 5-wave drop is a c-wave within a broader wave (iv) (shown in yellow), or if the b-wave has already topped with that marginally higher high we got last week, and this 5-wave decline is already wave i of the next larger c-wave decline?
As it stands right now, if the low that we struck today holds, then the rally thus far is really looking more corrective than impulsive. Keep in mind that in standard retracements, the a-wave often targets the .382 retracement of the prior decline, and that is pretty much from where we turned down just now as I am writing this update.
So, unless this market can give us a few more waves higher for a wave 1 in yellow, then I may be adopting the “topped” count by tomorrow. But, if the market can provide us with a cleaner 5-wave structure off today’s low, then we can look forward to higher highs over the coming week or two before this tops out.