Still Waiting For That Higher High

The market has simply been griding around in this region for weeks now.  And, yes, it is quite frustrating.  But, we still need to remain on our toes, as the market has yet to make its decision.

While little has really changed in my perspective, I do have to add a few notes.

First, with the size of this “bounce” this week, it is really hard to view this as a possible wave iv in yellow.  But, if it is, it would have to be within a leading diagonal for yellow wave 1.  And, as I keep noting, I have a hard time relying upon diagonals until they actually prove themselves.

But, what this action has done is that it has solidified the 3850SPX region of support.  You see, as long as we remain over 3850SPX, this can still be a wave iv in the green count.   But, more importantly, if the market should see an immediate break down below 3850SPX without getting a wave 2 bounce, then not only does it make it more likely that we are dropping in the c-wave of wave [2] presented in yellow, but that the structure is taking shape as an ending diagonal.

So, it allows me to give you a stronger support at this time in the 3850SPX region.  As long as we hold over that support, then the market can potentially set up its 3rd wave break out sooner rather than later.  But, should we see a sustained break of that support (meaning more than just a spike below that level followed by a strong reversal), then the probabilities begin to rise that we will revisit the 3700SPX region one way or another.

And, lastly, should we see that higher high sooner rather than later, then I may have to more strongly consider that this pullback/consolidation MAY be all of the wave 2 we see due to the size of the pullback at this point in time, relative to the size of the prior rally.  So, if we do see that higher high in the SPX soon, do not automatically expect that we will revisit the 3900 region, as we may only see a pullback to the 3950SPX region.

In summary, I can say that as long as we hold over the 3850SPX region, I can view this structure as more immediately bullish, and pointing us to the 4300SPX region sooner rather than later.  But, should we see a sustained break of that support, then the door does open for us to revisit the 3700SPX region.  Both paths likely still point us to 4300SPX in 2021.  It’s just a matter of whether we see a detour first.

Avi Gilburt is founder of