S&P has finally reached our main target levels yesterday. As mentioned yesterday here and in our twitter account, prices were expected to break 1620 and test 1610-1600 support level. So our target from 1670 has been achieved. So is it over? We believe that although the short term trend is down we could very well be at a turning point. Yes prices could fall towards 1595, but still the form of the decline still looks corrective and we still have as our main wave count the scenario that we currently are in wave 4.
As shown above, our favorite scenario implies that we are in the final stages of wave (4). Wave 5 is expected. Cancellation of this wave count will come if prices break below 1660 and if the decline takes an form.
Confirmation of the end of wave (4) and start of the upward 5th wave will be given by two signs. First the rise must be . Secondly the pattern of and lower highs must end. Prices will need to break above the 1647 resistance and above the blue trend line.
The same stands for SPY. The upward channel is being tested and prices should not overlap wave (1) for this wave count to be valid. I expect a bottom around 1600 if not already made, and new upward move. Until a viable stop can be found, we will wait for signs of impulsive upward price movement and break of resistance levels in order to open long positions.
As always, thank you for taking the time to catch up on my thinking.