With the Fed not changing interest rates this past week, the common fundamental theme seems to be that the only direction for the market to move is up. While my long-term expectations still target the 2537-2610 region on the S&P 500 SPX, -0.66% I am not so sure that we don't have one more shake out before that rally begins.
Last week, when many were so uncertain and bearish, I noted that we should expect more whipsaw, until we resolve the pattern higher to complete the b-wave. That is exactly what this last week presented us.
However, now we have been testing the higher regions for what a b-wave would normally strike, and it seems that we are setting up another drop in the near term. While the wave structure can still allow for one more rally toward the 2183SPX region, as long as we maintain below the 2183/87SPX region, then I will be looking for the c-wave down to complete wave ii of wave (3).
As you can see through the link below, the target box for this wave ii has been enlarged, since this b-wave rally has come so high. That means the minimum target I would have for this c-wave would be the 2110SPX region, wherein a=c, with the 2037SPX region as the deeper target where c=2.00*a. When we develop the 1-2 down in the c-wave, we should be able to significantly narrow down that target as the downside develops over the next week or two.
For now, as long as the market remains below resistance, I am going to be looking for a c-wave lower. Alternatively, should the market be able to break out through 2203SPX, it makes it much more likely that wave ii has completed, and we have begun wave iii toward the 2350SPX region.
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