I trust everyone had a good weekend and is ready for some downward action in the market. I about lost my lunch when I saw the /ES over the weekend. A nice ramp up to 1071 combined with a few manipulation posts from ZH made me want to beat the dogs (I did not of course - and you never should either). Fortunately all the ramp jobs did was complete the triangle (target 1047).
I believe we are in either 1 or 3 of C up in the SPX. There is only a difference of around 14 points in the counts, so it is not that big a difference. That said, this is either the beginning of 2 or 4 of 1 or 3 of C. IMO this is some sort of 3 down right now. Correctives will usually cover 38% minimally, so the fibs for this fall 1043, 1033 1023 with the gap at 1018 re some good numbers to look at. If this fall should break 991 low and super support area, we have to begin to look at different counts all together. (Note: that statement could be a early warning that I think there might be a bunch of upside to come, but the jury is still deliberating that one.)
The most important thing to point out in the chart below is that over the weekend price broke back into the larger dominant blue rising wedge formation. Some will call a top and that was a throw over of the wedge and that the top is in. Possible, yes, reality, no.
SPX Daily Chart - Pretty clear the MACD histogram is leveling off, S Sto has a bull cross and is embeding and RSI may have topped out with a nice divergence to price all which lead to a daily indicator top. Those lead to more meaningful pullbacks. At this time I like the 1043 to 1033 range and would expect price to form some sort of triangle that would be characteristic of a 2 or 4 wave.
The VIX has completed the dead cat bounce and is consolidating just under the dominant down trend line. I believe the VIX will get a good pop here possibly to get above the 30 number. CPC has apparently bottomed (again). TRAN has reached its upper bear market trendline and is reversing. COMP has breached the upper bear market trendline, but it is at the upper wedge line. INDU at resistance. All around things appear to be possibly beginning some sort of topping process.
Let's all wish Little Shanky a happy 9th birthday today!