The Whip It Theme Continues Into The New Year

Yesterday's theme song of the day was Whip It - Whip It Good. Today we seem to have gotten stuck on repeat as we opened up higher only to grind lower back towards the lows that were struck yesterday. This move complicated the potentially near-term bullish resolution but with the grinding and overlapping action that we saw lower today, I am not confident that we have indeed begun the more immediately bearish red count which would suggest we are in the heart of a wave iii of 3 down.

 So with that, I am still leaning towards seeing the market move higher over the next session or two but even if we do move higher we still will need to see how we follow through to the upside before we have a better idea of where this is heading in the weeks ahead. 

Bigger picture nothing has changed from the previous EOD updates. On the smaller timeframes, I am leaning toward the market finding a local bottom as I have laid out per the green count. This is largely based on the structure of the move down off of the high counting best as an ending diagonal. This is more suggestive of that move being a corrective wave structure rather than the start of the third wave down per the red count. If we do move higher we will need to keep a close eye on how this reacts as we move higher and to give us a better idea as to whether we are indeed following the c wave up of a larger wave 2 or if we may see further upside follow-through per the yellow count. At this point in time it is simply not that clear.

If we break lower rather than higher and move under the 5859 level on the SPX followed by a break under the 5834 low then it would open the door for this to have begun the larger third wave down per the red count as was laid out in last night's update. 

We likely will have an answer to which path this is going to take on Thursday as we are simply running out of room to the downside for this to move much lower and if we are indeed bottoming in the green wave b I would expect a fairly sharp reversal back toward today's HOD to start the move up. 

On a personal note, I would like to wish everyone a Happy, Healthy, and Prosperous New Year. I thank you all for being a part of the incredible community that Avi and Rich have built. A community that I am honored to be a part of as I approach my 10-year anniversary of joining the ETW analyst team.