Since I have extended my weekend holiday I did not have enough time to study/review the markets so today I can only post a brief update.
So far it has been quite easy to "decode" the EWP from the June 4 low.
As a reminder my preferred count off the April 2 top is calling for a counter trend wave (B).
I had initially assigned as a potential target the range 1344 - 1363
Now the problem is to be in full control of a complex EWP since unfortunately price is not unfolding an "easy to read " Zig Zag, maybe it is not even a Zig Zag.
Above, the potential topping spots remain at the gap fill at 1353.39, which in addition is also a weekly gap, then at the 1357-1359 area & the 0.618 retracement.
At the moment we cannot rule out a move above the 0.618 retracement since if price is unfolding a Zig Zag the extension target could carry price towards the 1370 area.
Waves (B) are tough, as "they" can do almost anything: Zig Zag, Double Zig Zag, Triple Zig Zag, Triangle etc.
So far there is no indication that price has completed an ending pattern despite yesterday´s Spinning Top.
The pivot support is at the 10 d MA = 1320
There are plenty of catalysts that could trigger a trend reversal but I doubt that price will establish a top before next Wednesday's FOMC meeting.
Even though the internal structure should allow more upside we know have several indicators that are now suggesting that SPX is getting overbought.
- Daily Stochastic has entered the overbought territory.
So I will be monitoring the Stochastic to see when/if a bearish cross is issued and the RSI´s trend line support.
- The 10 d MA of NYSE Adv-Dec Volume is approaching the overbought range.
- The McClellan Oscillator is approaching the 60 line
In addition to the "still" bullish short-term internal structure the absence of negative divergences are favoring more upside for the assumed wave (B).
Yesterday the most sensational move was achieved by the VIX, which plummeted 13%, breaching a trend line support in force since the March 16 low and closing below the lower BB.
The next support is at a gap fill at 17.56
Since, often, VIX leads the market in bottoming or topping ahead of the equity market we have to monitor it closely.
Sector wise I am monitoring IWM since if a bullish IHS pattern is confirmed by a break out above 77.85, even though price will not acheve the theoretical target I would not rule out a move towards the gap fill at 81.58, in which case SPX could reach the 1400 area.