With this morning’s weakness, the S&P 500 (SPX) came right down into our micro support box, and held to the penny. As noted on the 5-minute chart, should we hold this support on a pullback, it leaves the door open to the 3034-45 SPX as a target for a final high in this move off the June lows.
What is most interesting is that this structure – as well as the Nasdaq chart – trace out well as ending diagonals. When ending diagonals complete, we often see very strong moves to their highs, which also often spike through the top of the trend line, followed by equally strong reversals. And, with the Fed announcement on tap tomorrow, we have a catalyst before us which can certainly drive such a reaction.
So, my parameters remain the same. As long as we hold over 3000 SPX, the upper end of the resistance region remains a reasonable target to complete this diagonal. And, I will be on the lookout for a spike and reversal to signal that this ending diagonal structure has completed. Such a spike and reversal which then breaks back below 3000 -- or any break down below 3000 for that matter -- will be our initial indication that the top has been struck, with follow through below 2950 being the confirmation point.