Reminder of "my Big Picture":
My primary scenario calls for a large corrective pattern from this summer highs:
- The corrective pattern is expected to unfold an ABC or ABCXABC.
- Within this pattern price is now unfolding the wave (B).
- The wave (B) should top in the range 1330 (Trend line resistance off 2007 top) - 1370 (Actually the equality extension target is 1375).
- The wave (B) is assumed to be tracing a Zig Zag = (abc), therefore price is now unfolding the wave (c).
- Within the wave (c), price has to trace an impulsive 5 -wave up leg or an Ending Diagonal.
- Depending upon the wave structure adopted by the price the final target should be located in the area of the TL off 2007 top - if wave (c) shapes an ED or this summer highs - if the wave (c) choses to go for an impulsive up leg.
- Once the wave (B) is in place we will have a likely multi week/month top and price will retest at least the October lows.
This weekend I have discussed that despite the EW pattern is not completed, we already have several warnings in the technical front and from sentiment indicators therefore we have to be open minded and "vigilant" since the higher the price it goes, in this counter trend rebound, the R/R will increase for the short side.
Within the complexity of the wave structure, I have discussed several times that in my opinion price has "only" 2 options: either an ED or a large 5-wave impulsive up leg.
We know where the ED is wrong as if price refuses to "enjoy" a pause and marks an eod/intraday print above 1310.44 - 1310.76 (depending upon where you place the top of the first wave) the ED scenario will be aborted.
Therefore it is just a matter of waiting for price to end the up leg off December 19 low and follow the pullback.
If in the current up trend, price does not extends above 1310.77, the ED will need the overlap below 1267.06 during the wave (IV) pullback and should bottom at the 200 dsma & gap fill = 1257.60 from where the last corrective wave (V) will complete the wedge.
Unfortunately the pullback may not allow us to differentiate the ED from the impulsive option, but atm this is not the trading problem, as the bias is still up until proven otherwise.
I believe that the forex market will play a major role in establishing the "length" of the equity wave (B).
In this respect the EUR is holding the key as if it achieves to establish the bottom of the down leg off its October peak then the following counter trend rebound should maintain a proportionality, time & price wise, with the preceding down leg, therefore I would guess that SPX could retest the summers highs.
Regarding the potential ending pattern I am "working" with, a potential Ending Diagonal, it still needs an eod print above 1.2878 in order to be considered completed.
For the immediate time frame despite yesterday's daily shooting star, if my s/t count is correct price needs one more push up.
Hence today price should not close yesterday's gap at 1289.09
On the other hand the shooting star will be confirmed with a move below 1277.58 in which case the gap at 1257.60 and the 200 dsma will come into play.
Above I have the impulsive count but you could label it also as a corrective up leg, hence, the ED is also valid.
Thursday could be a turn window with INTC report.