S&P rebounded yesterday as expected after completing an downward wave pattern at 1684. The decline from the recent all time high is clearly a 5 wave move. When at 1685 we posted in twitter that an upward correction should be expected. Below is the 10 minute chart with my Elliott wave labels and the path I expected the index to follow.
Although this 5 wave downward pattern implies more downward pressures are to be expected once the bounce is over, we have to keep in mind the possibility that this downward move was only wave C and part of a corrective wave formation. In the 60 minute chart we see things more clear. Important intermediate term trend support is found at 1680-70.
Bears could try end enter short again today as the index trades (futures and cfds) near the 61,8% Fibonacci retracement of the entire decline. This is where bears should go short with the recent highs as stop. Breaking below the blue support area will confirm our bearish primary scenario that we are heading towards 1650-40 as noted in previous posts. Bulls on the other hand will want the index to hold above 1680 as breaking below will be a bearish sign. I will also like to say again that bulls have more to lose at this price levels than bears. So I would not go long at this level. At least bulls should raise their trailing stops.
As always, thank you for taking the time to read my new post.