This Could Get Treacherous

Yesterday, I outlined a potential path that could take us towards the 7000 region with VERY shallow pullbacks.   And, overnight, the market has made an attempt at following through with that path.  But, with a break down below a micro pivot, we seem to have failed.   This has now opened two paths of which I want you to be aware, and both are relatively treacherous.

Should the market be able to maintain over the 6805SPX level, then we may be tracing out an ending diagonal for this c-wave, as shown on the attached 5-minute chart. Once completed, we will likely see a strong reversal, the extent of which can give us indications as to the degree of top we have struck.  Needless to say, I have a hard time relying on these types of structures, especially when the market builds its base on a weak foundation without any real pullbacks.

The other option is if we see an impulsive break-down below 6805SPX.  This can suggest that we are topping in a b-wave rally just north of the .764 retracement of the recent decline.  If the top of that b-wave was struck today, then it can point us down to the 6550-6580SPX region.   

Yes, I still struggle with this topping structure, as it has not provided us with a standard 5-wave structure into a high.  Yet, we have not yet broken any major supports, which leaves us in a treacherous limbo of sorts.  For now, I have to assume that the market is going to at least attempt a run to the 7000 region.  However, if we see a sustained break-down below 6550SPX, that very well could open the door to a very rapid decline to the 6200SPX region next.  So, again, please make sure you have your risk management plan well in place before any supports begin to break.  But, for now, the bulls still remain in charge.