Market strength proves itself once again

The market initially cooperated with expectations this morning when price dropped strongly lower following the open, after futures reached the .618 retrace at the pre-market high. However, the underlying bid proved too strong once again, and immediate downside follow through as wave C of iv already was invalidated when price broke back above the pre-market high.

This does not automatically mean that we should assume yesterday's low completed all of wave iv, although it is a possibility that we must now consider as more probable than it was this morning when we were below the .618 retrace.

As of writing this, it still looks like 3 waves off yesterday's low, just as a full 100% retrace of the A-wave, so I believe that the B-wave of a larger wave iv flat is still a reasonable possibility. However, this market has taught us not to fight it if it intends to take the more immediately bullish path as wave v already underway. That said, if already in wave v, then we should not see price break back below 2792 SPX at this point, otherwise that should put odds firmly back in favor of the C-wave down to retest yesterday's low.

$SPX - Micro - Jan-17 1231 PM (30 min)
$SPX - Micro - Jan-17 1231 PM (30 min)
Garrett Patten covers both U.S. and international equity indices as well as stocks for ElliottWaveTrader.