Who Blinks First?

I outlined earlier today in an alert that there are two paths for the bulls, whereas only one for the bears.  So, let’s review them.

The first and most immediately bullish path for the bulls is for the market to rally over the b-wave high on the 5-minute chart, and potentially complete a leading diagonal for wave i of ii.  We would then expect a wave ii pullback, which if followed by a rally over the high of wave i would signal a minor melt-up phase in wave iii of [3] of 3 in the SPX chart, pointing us north of 6200SPX.

The second path for the bulls is for us to remain below the b-wave high, and break below the 1/(iv) low, which would then suggest we are tracing out an ending diagonal for the c-wave of a larger wave [2].  Thereafter I would expect a 5-wave rally for wave i of [3], followed by a wave ii pullback, setting up the same type of minor melt-up phase as outlined above.

Unfortunately, due to the 3-wave structures, the market is not tipping its hand yet as to which path it wants to take.

Of course, the one path for the bears can only begin to be considered upon a break of 5674SPX.  And, until we see such a break-down, the bulls will remain in control for now.