I’ve been looking for a bigger bounce on $SPY taking us sharply up towards the orange box where the “x” is, and while we moved in that direction, the bounce wasn’t all I had been hoping for. The index is very difficult to count, but the cheap rally we got on 9/15 may have been a connector between two 3-wave segments. The rest of it could unfold in another 3-wave move roughly like below.
The “a” wave should be composed of 5 subwaves and if the count is right, and we may only be part way through it. The alternative is that the 3-wave move from the x is already the a-b-c and we could now rally strongly without looking back. I wish I could be more helpful, but the first leg of the correction is too much of a mess for me to have a lot of confidence one way or another. I can’t know when big buyers are going to enter with certainty.
Gun to the head, I would say we finish the pullback sooner rather than later, but I’ve now gone on saying that for several days. I’m filing this under “Obervations” because I can’t really make a call here. After two weeks of dripping lower, the higher probability move remains up in my opinion.
If the second leg is already done, it would look like this:
I can’t let myself get too bearish here because the time to get more bearish than I was was last week, not now. If I get too bearish here, I risk compounding the error because that’s when the big bounce I’m expecting will probably emerge.