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:
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.
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