SPX: Follow Up of the Short Term EWP
Based on what I have discussed in my last weekend technical update, in my opinion the risk is quite high for at least a multi-day pullback.
Even though the internal structure of the up leg off the November lows is clearly corrective I rule out that it belongs to a bearish countertrend move, instead as I have been suggesting recently it should be long to and an Ending Diagonal, either a wave (III) or a wave (V), therefore I expect only a Fibonacci retracement of the November's up leg.
Therefore I maintain the idea that the pending pullback will eventually be bought as it should be the wave (B) within a larger Zig Zag that will establish either the wave (III) or (V) of two Ending Diagonal options (Please read my last weekend update for a more comprehensible explanation of the two Ending Diagonal patterns)
In the SPX daily chart below I highlight 4 potential areas where price should end the pending correction:
- Rising trend line from the November 16 low
- 50 dma = 1418
Today we have two more reasons that are warning for a pending top:
- CPCE low reading:
- McClellan Oscillator has established a lower low
Regarding the short-term price action I also maintain the idea that price from the December 31 low is unfolding an Ending Diagonal, maybe it does not require another marginal higher high as it could truncate.
The loss of 1465.69 should begin the overdue pullback.