Despite the Emini S&P 500 (ES) slightly breaking below the .382 retracement support last night, the market has come back roaring today to complete 5-waves up off the low structure last week. This now keeps the yellow count alive and well.
Yet, remember, the [a] wave in green can also be a 5-wave structure.
So, how are we going to be able to tell the difference between the green and yellow counts?
Well, it would seem that as long as we hold below the 3400ES region, it would be reasonable to expect a pullback to begin in the coming days. That pullback will either be the [b] wave in green or wave ii in yellow. It will be the rally that takes place thereafter that will tell us which is the applicable count.
This is where our Fibonacci Pinball structure is so useful to determine the difference between an impulsive structure and a corrective one. You see, once we complete the [b]/ii pullback in the coming week, we will set up our Fibonacci Pinball levels to the upside. Once the market strikes the 1.00 extension off the [b]/ii support, the.618 extension will be the major tell. If the market breaks down below the .618 extension in impulsive fashion, it tells us that we are starting the green [c] wave down to complete the larger degree green wave [ii]. However, if the market pulls back correctively and holds the .618 extension as support, then it makes is likely that we are heading back up to the prior market higher – and can even potentially slightly exceed that high – to complete the yellow wave 1 of wave  of [iii]. That will then put us on high alert that after a wave 2 pullback, we will likely be on our way to the 4000-4250 region in the S&P 500 (SPX) cash index sooner rather than later.
So, the next few weeks are going to be very important to telling us whether we are heading to the 4000-4250SPX region sooner than later, or if we will still get our ideal pullback to the 2800-3050SPX region for wave [ii]. For now, I will be looking higher in the coming weeks once we complete the next corrective pullback over the coming week.