The Floor Is Creaking

As I write this, the market is seemingly making an attempt to break down towards the 6550SPX region next.   I have added a 1-2 count on the 5-minute SPX chart to suggest that the c-wave down has indeed begun.  But, with all the overlap we have seen today, it is hard to yet determine if wave 2 is complete.  There is still potential that the market may try to rally one more time to complete the wave 2.

The main point remains the same though:  As long as yesterday’s high is respected, I still believe that the preponderance of the evidence is pointing lower.  And, breaking down below 6604SPX will make this a much higher probability.

But, please do recognize that I am still maintaining the alternative for the ending diagonal for the c-wave of wave v.  Within this count, we are pulling back in a b-wave within wave iii of the ending diagonal, as shown on the 15-minute ES chart.  And, this will get confirmed if we are able to take out yesterday’s high, especially in the futures.  That would make this count a much higher probability.

So, the market is still fighting it out in the current region.  For now, I still lean lower.  But, please recognize where and how I would abandon that expectation.

There is one more point I want to make.  When an ending diagonal completes, we often see a strong reversal.  We have not seen such evidence at this time.  So, it tells us to leave the door open that the upside has not likely completed yet – at least not until we see the typical evidence after a diagonal has completed.