Today Is Important - Market Analysis for May 12th, 2022

With the market being unable to hold the bottoming we struck at the end of the day yesterday, there is really no room left for the wave (4) in green.  Either we begin a strong rally today, or I am going to be moving into the next degree wave [iv], which can take us down into the 3600-3767SPX region.  I am not giving this any more room.

Ultimately, until we see a move up that is able to take out resistance, I am going to maintain my own hedges, and may even add to them on the next corrective bounce.  Right now, we have to get through 4070 for me to accept a bottom is potentially in place.

And, in case you as questioning why I am giving it this extra downside in the futures this morning, if you calculate an a=c off the 4818SPX high, you come up with 3930SPX, which is where we bottomed yesterday.  But, if you remember, the futures went a bit deeper than that and then recovered before the open.  So, I am going to give it the extra 20-30 points difference we hit in the futures that night, which means the market hit that low in the futures this morning.  If this does not hold and begin a big rally today, then I move into the bigger degree wave [iv].  

I still have not often seen oversold conditions and extremes in sentiment as we are facing today.  So, while I may move into the alternative count after today, I will be on guard for a reversal at any time.

60minSPX
60minSPX
Avi Gilburt is founder of ElliottWaveTrader.net.