If you read the title to my article over the weekend, you clearly saw my concern about further whipsaw, especially if the market was unable to complete 5 waves to the downside. And, boy did the market give us another whipsaw moment.
But, for those following my analysis closely, you should have recognized that we did not have a clear indication that the b-wave had completed until we finished 5-waves down. Until such time, there were too many other options on the table for me to confidently view us as beginning a much bigger decline.
With the market’s inability to complete 5 waves down, it has opened the door again to the 2875SPX region for a more appropriate b-wave high, despite the depth of this recent pullback. However, as long as we remain below last week’s high, it leaves the door open for the yellow count as well. And, since we are dealing with 3-wave structures, it does not leave us with a clear path or distinction between the two.
Although my “preference” still remains to target 2875SPX, I have to clearly note that the structure has become less than ideal due to the depth of this pullback. But, it would fill in this b-wave structure in a more appropriate manner.
So, if push came to shove, I would have to say that a rally to 2875SPX must be my primary count. Yet, as I have reiterated before, trying to trade for that last segment of this rally would be quite risky, at least in my humble opinion.
And, if the market provides us with a corrective pullback when this rally that started at Friday’s low runs its course, it may provide for a nice entry on a higher-risk long trade pointing towards the 2875. Should that set up develop, you have to determine how much risk you are willing to take to trade for that last segment. But, I will point it out should it develop later this week.
Again, even though the market dropped below support, it has left the door open to 2875SPX. And, since I have no clean set up pointing to that region just yet, I will highlight it should it develop, with the warning about the higher risks inherent in trading for that target.