Market Down, But Is it Out?
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Today we saw the market grind up slowly into the FMOC announcement only to get rejected and turn down sharply post-announcement. This sharp move lower is suggestive that we have put in at least a local top but the bigger question is whether we have indeed topped in our larger degree fifth wave.
We still will need to see how the market reacts as we approach the lower support zone below before we have an answer to that question but this sharp initial move is certainly the initial warning sign that the larger Ending Diagonals that we have been watching across all of the indexes may have indeed topped.
I am going to focus today's update on the 60-minute SPX chart as the current micro extensions are really too large to be terribly reliable. As I noted above this initial sharp move certainly has the personality of what we typically see when an ending diagonal ends. We do still however need to see further confirmation that this is indeed the case with a continued break of support.
As of right now I have upper support on the SPX coming in at the 5819 level and should that break then I will be watching the 5737-5560 zone as key support below for the blue wave iv.
This 5747-5560 zone will be a very critical region to hold if we are indeed going to see another push higher for a wave v into the early part of next year. Should that zone break then it would suggest that we have indeed finally put in our larger degree top in the markets. At that point, we are likely to see much lower prices in the months and years ahead as we have been laying out for some time now.
Should the market hold support then we still cannot rule out seeing yet another higher high into the new year. We will have to keep an eye on where we bounce and the structure of that bounce to help give us better guidance as to whether another push to new highs is likely going into the new year.
For now we will need to watch the support levels noted above and see how this market reacts at those levels. Just keep in mind that we have a potentially full count on all of our degrees into the potentially major top so while we caution remains warranted in this region for most investors.
