Market Sees A Retrace But Still Over Micro Support
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Today we saw the pullback after the strong move up yesterday. At this point in time this pullback is still corrective in nature and we are well over the micro support/retrace levels. Furthermore we are over the upper trend line of the potential ending Diagoanl channel. So with that and as long as we continue to hold support my base case will remain that we will see at least another pushback over yesterday's high and ideally a move toward the 6000ish region where the larger Ending Diagonal began.
Drilling down to the 4min SPX chart I have support for this pullback coming in at the 5600-5525 zone. This zone also resides over the upper trend line of the potential Ending Diagonal channel. Often times when an Ending Diagonal reverses we will see an initial break of that channel followed by a retrace that tests the upper trendline of that channel. So ideally I would prefer any retrace to stay above that upper trendline, which again we so far are doing.
We will still need to see a full five up off of this support zone to signal that we have begun the next wave c up. That would then need to be followed up with a break over yesterday's high at the 5702 level.
Should we begin to see a break under the 5525 support zone then it opens the door for this to still see lower levels before finding any sort of bottom. Under that case however, it would make it more likely that we are following the red count making any bottom at that point likely be the wave (a) of a larger move down. For now however and as long as we hold micro support at the 5525 level I do prefer to see this move higher before breaking the lows that were struck on March 14th.
