The top may be in, but with the wave structure so messy, it's hard to predict a direct and immediate reversal. After cross-studying a number of indices, I'm open to the idea that there's one more new high coming -- but I'd give maybe 55% odds to the new high, and 45% odds to the rally being complete. If you forced me to give exact targets for any new highs, I would say 1267 SPX and 2385 NDX -- so it’s probably safe to say that the rally is, effectively, over.
If by some chance you're just joining the discussion, it would be helpful to familiarize yourself with The Big Picture chart, which has tracked well enough so far that I haven't felt the need to update it in over a month. That article also contains a brief introduction to Elliott Wave Theory (unfortunately, however, it contains nothing on Elephant Wave Theory).
The first chart is the SPX chart, with the best-fitting way I can find to label the jumbled mess that has been this rally. On this chart, you can see that it appears the SPX is in its final wave up, so it may have topped yesterday. Just going off this chart, one could be fairly convinced that the rally is over. The NDX chart (the last chart shown) looks like it might need another high, which is one reason I’m split on the two views.
If this is indeed a second wave retracement rally, the only rule by Elliott standards is that it doesn't exceed the top; i.e.- last Thursday's high. Second waves are allowed to retrace 100% of the prior move (but not over)... so the targets posted are my preferred view, but the rally is free to exceed them if it wants.
For several days, I have also been showing the chart which has the alternate bullish interpretation of the current wave structure. I remain disturbed by the fact that the decline off last Thursday's high can count so well as an a-b-c... however, if that's what it was, it was a very forceful correction... but C-waves are known to trick people, even technicians, into believing the trend has changed. I am still giving this alternate count (chart below) about 30% odds. A move below 1197 SPX will knock this count out.
One more chart of the SPX, then I'll move onto the NDX. The next chart shows a longer-term view of the SPX and how it has once again gravitated back into the area of the head and shoulders neckline. Depending on how one draws the neckline (intra-day lows or closing lows), we are either there already, or a few points away. It will be interesting to see how the SPX responds to this area now that it has been violated once previously. Theoretically, this area should still be a battleground and potential reversal zone.
Again, if the preferred count is correct, the ultimate resolution to all of this will be new lows on all the indices. Beyond that, not much to add over yesterday's article. Trade safe!