Are We Ready To Bottom?
By
Avi Gilburt
In the weekend update, I outlined my view that wave 3 should be ending imminently. And, as of my writing this update, it would seem to be the case, as the market has now seemingly rallied in wave 4.
I am not going to try to micro-manage this too much, but I just want to note that wave 4 can continue another day or two, and it would actually be preferable from a technical standpoint. While the MACD on the future’s 60-minute chart is providing us with a nice positive divergence set up should we get that 5th wave lower low, the SPX 60-minute chart is only starting to curl up. So, ideally, if we can consolidate in this region for a bit longer, then it would also provide a nice positive divergence set up for this bottoming structure.
Furthermore, most of the charts I am tracking still suggest that the most likely expectation is for a 5th wave lower low. And, should we get that in the coming days, then it would provide us with a nicely completed 5-wave [c] wave structure, and likely conclude this [a][b][c] correction.
We will then turn our focus on the rally we expect to the target box outlined on the 60-minute chart. I will have to adjust it a bit once we have a confirmed low in place, but it now represents the general region I would expect the next rally to take us.
Overall, the market is continuing along the path outlined over the weekend. But, it has dropped a bit deeper. Yet, the bigger picture does not change in either the yellow or red counts. We will not be able to differentiate between the two until we see how the market pulls back from after it completes the rally to the target/resistance box overhead. Should the pullback be clearly corrective, we will follow the yellow count to new all-time highs. For now, I do not see that as the more likely path. And, should the market provide us with a clear 5-wave decline for wave 1 of the c-wave in red, well, that makes it a high probability that we are setting up for a mini-crash to the 3500-3800SPX region later this year, which will also confirm that the long-term bear market has likely begun.
So, in the near term, I think we can look for a bottoming over the coming days, followed by a rally back to the resistance/target box overhead for what I am primarily viewing as the red b-wave for now.
