Caught In The Micro-Middle

With the market simply consolidating today, we have overlap that we really should not be seeing if we are in the heart of a 3rd wave in this move up this week.  So either the market is about to break down below micro support up here in the 2728SPX region, or we are going to continue higher in what seems may turn into an ending diagonal.

So, as long as the market remains over the 2728SPX level, we can continue to subdivide higher to complete the d-wave of the triangle in the 2760SPX region.  Alternatively, if the market breaks down below 2728SPX, we may see a more protracted 4th wave, as shown by the alt-4 on the 60 minute chart.  But, as long as we hold the 2700SPX support, the market can still attempt to stretch for the 2760SPX region later this week, or even into next week.

The main difference between where we now stand relative to where we were this past weekend is that we can now move our support up to the 2700SPX region.  And, as long as we remain over that level, the door to 2760SPX is still open.  However, a break down below that support would suggest we are likely within the e-wave of the triangle.

Moreover, should we continue towards the 2760SPX region from here, then we will move up our support again to the 2706-2720SPX region.  As long as we remain over that support (after we strike the 2760SPX region), the market can still attempt to stretch towards the 2800+ region in the yellow count.  But, my suspicion is that we can top after the next rally is seen towards 2760, which I think has a reasonably probable chance of breaking below the 2706SPX support, and sending us down in the e-wave of the 4th wave triangle.

Lastly, should the market provide us with a VERY CLEAR 5 wave structure down from the higher we strike in the next term, we will have to take the red wave count on the chart a bit more seriously.  Until that is seen, then my primary count still remains the triangle.

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