Wednesday, July 7, 2021

SPX Update

(Note:  After proofreading the add-on piece, I decided to go into more detail on certain topics and have thus held off on publication for now.)

Friday's update noted that if the prior back and forth action we'd been witnessing for weeks was a bull nest, then it could finally start to run, and run it did, right up to the next long-term resistance line, which triggered yesterday's sell-off (second chart).

First, though, let's look at where we are in the near-term.  Tuesday's decline came back down to test the first "Bull: 4" inflection (which was already on the chart from Friday).  If bulls can push just a little higher, they can kick the bear diagonal option of the table -- if they can't, then the next "bull: 4" and "bear: iv" inflection zones (plus/minus) are noted:

Bigger picture, we can see the long-term resistance line (which has been on the chart for a while) that triggered yesterday's drop:

In conclusion, if bulls can push a bit higher here, then we enter fifth wave territory, but because of the option of an extended fifth, that's not necessarily "bearish" for a while.  An extended fifth could last a few months and run hundreds of points higher -- so it would become "await an impulsive decline or other clear signal" territory.  If bears want to keep their diagonal on the table, they'll need to act quickly.  The next few sessions should answer that question, at least.  Trade safe.

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