Today Is A Big Day

I am taking a step back right now, and posting today only from the daily chart for now.  As you can see, we are hovering around the 200dma. 

During this entire bull market, the 200dma has served as support for the uptrend other than when we entered larger degree corrections.  As I have noted before, should we see a sustained break of 2770SPX (with 2765 being the 200dma), then it makes it likely we are heading down to the 2600 region.  However, if the overnight low holds, and the markets gets back over 2770SPX today, and remains over it into next week, then we are still likely in wave (v) of (5) of v of 3, and heading back to 3011, as hard as that may be to believe.

You see, this is why I have been warning that the market is so treacherous when we broke 2880SPX, as I discussed in the weekend update:

“But, this is where trying to trade for the last segment of an ending diagonal gets very tricky.  Even though the ideal target is 3011-3040SPX for this ending diagonal, sometimes they do not reach their ultimate conclusion.  Moreover, sometimes they even top where one would expect only wave (iii) to top, and many times they even see a strong spike through their standard targets.  In other words, when dealing with ending diagonals, you have to understand you are in a treacherous market environment which provides significant volatility in both directions.”

So, while the wave (iv)(v) potential still remains on the chart, we are at an inflection point for this.  Either the market begins to rally strongly today, or it becomes much more likely that we are heading down to the 2600SPX.

Moreover, should we drop to the 2600SPX region, I want you to take note of the alternative count I have placed on the chart.  Since the market really does not count as a clear completed 5 wave structure at the last high (which came short of the ideal target), I am going to maintain a bigger wave (4) flat as my alternative count.  Again, this is only in the event that we are not able to begin to rally strongly today.  And the ONLY way I adopt that as my primary count is if we see a CLEAR 5-wave impulsive rally off the 2600 region.  Anything less than an impulsive rally off the 2600 region will make it VERY clear that wave 4 has begun, and my ideal target for wave 4 still points down towards the 2100 region.

But, for now, the next day or two will tell us if 3011 or 2600 will be our immediate target for this market.