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 4^th 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.