Setting Up For A (c) Wave Rally

After I published my analysis yesterday, the market made its decision in providing us an expanded b-wave flat, which is not the most common of patterns.  But, what it ordinarily suggests is that the market is trying to go higher, which is often a bullish indication, even within a corrective pattern.

The rally today has not exactly been the most impulsive structure off the lows.  Since a (c) wave “should” provide us with a standard impulsive structure, and we have to struggle to identify one off the lows, it leaves the potential for one more swing lower to complete the c-wave of the (b) wave.  Again, I am not suggesting anyone trade the downside, but rather use pullbacks to position themselves for the next rally we expect.  And, as long as we hold over the 2330SPX level, I am looking for a rally to take us back towards the 2400SPX region for the (c) of green b-wave.

If you remember, as we came into this week, I have wanted to see this (b) wave take us all of this week.  And, it seems we have come very close, if we have completed it.  Again, while we still could see another loop down to complete the (b) wave in a more extended fashion, we have the minimum number of waves in place to the downside to now consider it complete.  Yet, I would be much more confident if I had a clear 5 wave structure off the lows, which I do not have.

Tomorrow will likely give us our signal if the (b) wave has completed, or if we still need one more lower low before we begin the (c) wave into next week.  Alternatively, should we break 2330SPX sooner rather than later, then I would consider we could already be in the c-wave of wave (iv), with an initial target in the 2300SPX region.  But, I do not see that as a high likelihood at this time, especially as long as 2330SPX holds as support. 

Avi Gilburt is founder of