Nothing Yet To Really Get Excited About

We have now spent five days below the all-time high, and we have yet to even break the initial support at the 7320SPX region.  So, at this point in time, I cannot even say with confidence that the blue wave 1 or green wave 5 is done with its upside.  Although, I do suspect it is done.

With that being said, I want to remind you that if we have indeed struck a major high, it means we have likely concluded a major ending diagonal structure.  And, one of the hallmarks of the conclusion of a diagonal is a very strong reversal.  Needless to say, that is not what we are seeing.  This certainly adds some strength to the blue wave count potential.

Getting back to the wave structure, my assumption is that today’s bounce is in furtherance of a b-wave bounce, which “should” set up a c-wave decline which will break the 7320SPX initial support.  That would then have us targeting at least the .236 retracement of the recent rally, which is the top of the (a) wave box on the 5-minute SPX chart in the 7233SPX region.  

But, again, if we do continue lower in the coming days to that initial support box, the fact that we have not yet seen evidence of the strong reversal for which diagonals are known would suggest it would more likely be the (a) wave of the blue wave 2.   While it is still a bit early, I am just noting this point from the action we have seen thus far.  This can change in the coming days depending on how strongly we see the follow-through on the break down below 7320SPX.

So, if you asked me what my impression of the market was at this point in time based upon what we have seen so far, I would almost have to side with the blue wave 2 being in progress.   Again, this can change in the coming days, but, for now, I think this is the most reasonable conclusion based upon the information we have thus far.