Setting Up For Higher

With the market providing the pullback we wanted to see for a wave ii yesterday, it actually dipped below the .764 retracement in the cash index, with it seeing an almost 100% retracement in the futures.  However, wave ii has technically held, and we have a 5 wave rally off that low today, which I am counting as wave [i] of iii of [1].  

As long as the SPX remains below the 5760SPX level, then I am going to expect a wave [ii] pullback.  Should that pullback be clearly corrective, one can choose to buy into that pullback, and place stops at yesterday’s low if you have an intention of trading for the next move towards the 5900SPX region.  

I am going to add two caveats now.  Clearly, if we break down below yesterday’s low, we invalidate this set up.   Moreover, if the market sees a direct move through the 5760SPX level, and follows through over 5770SPX, then I must assume wave [ii] was completed by today’s intra-day pullback.  The only reason I even question that is because that count is possible in the SPX cash index chart, whereas the futures chart provides it clearly that we have not seen wave [ii] yet.  So, I just want to at least know where I have to adopt the more immediate move higher, and that would be a direct move through 5770SPX.

In summary, as long as the next pullback is clearly corrective in nature, and we do not break down below yesterday’s low, I am seeing the next move as pointing us towards the larger degree pivot on the 5-minute chart in the 5900SPX region.   That would likely be wave [1] of wave 3, or, in the alternative, the completion of the yellow wave v, and the potential top to the bull market.  Such a top would then provide initial confirmation in a break back down below the 5674SPX level, as I outlined over the weekend.