A Pullback - Market Analysis for Jul 18th, 2024
Well, it finally happened. The market has given us a pullback. And, this pullback is still more likely going to set us up for another rally before we can again expect another potential topping action.
In both the SPX, we have an a-b-c corrective pullback off the recent highs. And, since we are still well over support, I am still going to only view this as being a 4th wave pullback.
In the IWM, we have pulled back to the .236 retracement of wave [iii] in green, which is the typical target for an a-wave of wave [iv]. It is reasonable to expect at least a b-wave bounce to begin soon. And, if that bounce is corrective, then I would expect that we next challenge the .382 retracement just south of the 216 region. For the yellow count to take hold we would need to see a break down below 215.
As far as the SPX is concerned, I am tracking a similar larger a-b-c potential in the coming days. While we may still see a bit lower before the [c] wave of the a-wave is done, I think looking for at least a bounce is quite reasonable, especially consider that the MACD on the 60-minute chart has now turned to the oversold region from which rallies have begun in the past.
So, for now, I think it is reasonable to still expect higher in the coming weeks. But, this pullback may get a bit deeper before the next rally begins in earnest. However, if we see a 5 wave rally off a low, then we may have to consider the entire pullback as complete. For now, I am looking for more of a larger a-b-c to be completed.