[b] Wave Rally

As the title says, today’s likely provided us with a [b] wave rally, as highlighted on my micro-SPX chart.  As you can see, we have rallied up into the resistance target we had on our chart, which was our expectation one way or another.

Our primary count has us within wave (4) of a leading diagonal off the March lows.  And, as long as we remain over the 2600SPX region, this will remain my primary persepctive.

As far as today’s rally, we have certainly come high enough to view it as completing all of the [b] wave as we have struck the bottom of our target box, which represents the .618 retracement of the decline off last week’s high.  However, since corrective action can take many twists and turns, I am also tracking the potential that today’s rally may be the a-wave of a broader [b] wave, as also shown on the 5-minute micro chart.

As far as the bigger perspective is concerned,  I am viewing today’s rally as the [b] wave within an a-wave of wave [4].  However, I have to note that there are a number of charts which can support the next decline as completing all of wave [4].  So, once we confirm that the [b] wave has topped, we are going to then track a 5-wave [c] wave decline into the 2700SPX region.  And, again, there is potential for that to complete all of wave [4].  So, those who are a bit more aggressive may chose to buy longs when the 5-wave [c] wave decline completes.

Overall, should the market be able to move up towards the 3200 region in the coming months to complete wave i of 5, we can then begin to plan on buying the dips to prepare for wave iii of wave 5.  But, until such time, it may be best for most to remain a bit more conservative, as I have been outlining of late.

In the near term, as long as the market remains below the 2937SPX region, I am looking for a re-test of the 2700SPX region.

Avi Gilburt is founder of ElliottWaveTrader.net.