Red Has Gained In Probability

Sometimes, the market provides us with many potential paths, especially when we are dealing with 3-wave structures.  Yet, eventually, a 5-wave structure will develop within that “mess-o-waves” and clarify the wave count.  I believe that is what we are seeing right now in the SPX.

With the market breaking down below the recent lows, we have now invalidated the prior green count, and the red count has taken center stage, which points us down to the 5000SPX region sooner rather than later.  And as you can see from the attached charts, I have changed the blue alternative I discussed over the weekend to the new green path.  But, I will warn you that I view it as a much lower probability right now, and the market will have to break out over last week’s high (with follow through over the resistance box on the 60-minute ES chart) for me to even begin considering it again as reasonable probability.

Yet, before I am going to say that the red count is a high probability path right now, the market should provide us with a 5-wave structure one way or another in order to clarify the path to 5000SPX.   Allow me to explain.

Currently, we are seeing the bounce I outlined to expect in my live video this morning.  (For those that may not realize it, Garrett and I are opening the live video to the entire full-time membership through Wednesday.  So, if you missed them today, you can join the others, and listen to the ones we recorded today).   The question now is if the bounce will remain below 5615SPX as a wave (4) bounce, and then provide us with a lower low for wave (5) of red wave 1, or if we will continue through the 5615SPX region as a 5-wave rally to complete a larger [b] wave flat, as outlined in purple.  

As I discussed in the weekend update, I would almost prefer the purple path as it would allow the daily MACD to rise to the point where it would be reasonable to expect a 500+ point decline to the 5000SPX region.  But, we are going to be taking this step by step for right now.

Should the market provide us with a lower low in the coming week instead of breaking out through 5615SPX, then the next rally will likely be a wave 2 corrective bounce which will likely set up the decline to the 5000SPX region.  For now, there is ample reason to be much more cautious on the long side, as the paths to higher highs are starting to drop in probability.  

If the market has indeed set its long-term top in place, I believe we will see confirmation of this with the action we see through the rest of 2025, as I outlined in the live video today.  I am still going to leave the door open to one more rally. But, the door is likely going to close later this year if the bulls are unable to prove it to me.  

For now, we have three paths to track, which is reduced from the four from the weekend update.  I would assume that this week will narrow this down for us even further.