Market Still Not Tipping Its Hand
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Today we saw the market open higher only to be sold off rather sharply in the early afternoon session and retest the lows that were struck last week. So far we have managed to hold those lows and the structure into those lows is three waves at this point in time. The market still has the ability to form a local bottom and push back higher as part of the yellow count. Should we break under last week's low, however, it would open the door to a larger top being in place however we still would be dealing with a less-than-ideal structure off of the highs. For now, though, I will continue to watch to see how the price and structure develop over the next several days and whether this is able to form a more lasting bottom or if the market has other intentions in mind.
As I noted yesterday, the action on the smaller timeframes remains quite sloppy, and it was certainly not ready to break out higher just yet. The consolidation and turn lower took hold today, but as noted above we are still over the previous low so we can still count this as part of the yellow wave (b).
If we break below that 5430 low, I still would lean towards that low being an extension of the wave iv. With that being said, that lower low would open the door for this to be following the red count as we could make the case for five down. That five down would have to take the form of a leading diagonal so it is far from the most reliable pattern but the case could be made for five down nevertheless.
The RTY does still seem to have the cleanest micro pattern, as I can now make the case that we have five down off of the highs. We have yet to break below the previous low on that chart, so until that pattern resolves itself either with a break below the low struck overnight or invalidate with a break over the highs struck yesterday. So until the pattern on the RTY completes I am still hesitant to call for a bottom on the SPX just yet and we still may very well see another lower low before any sort of bottom is indeed struck.
As I noted yesterday the sloppy micro patterns are still leaving a bit to be desired, so I will continue to be patient and nimble in how I approach this market in the short term.
