The SPX, or it’s tradable form of instrument the SPY (SPDR S&P 500 ETF), was able to poke into the green “sustainable bull momentum area” not just once but three times (only once could have meant a bearish interpretation potentially). I bet many traders see the gradual increase of the last two days as a wedge or ending diagonal, just like the RSI does; but, at this high of an RSI reading, it does not mean more than a 1-2 days long correction, in all probability. To reflect better this bullish attitude I added an additional layer to my previous short term Elliott wave count. The US stock market and the SPY has sailed north so smoothly that we have to consider something more bullish than we originally thought. We will have a better understanding of the structure as soon as the market chooses one of the three possible channel variations.
On the bullish side, in the case of a bull breakout tomorrow it’s unlikely that the market can sustain another leg up for more than a couple of hours. We shall see, maybe everything stays the same as it did with Yellen’s interest rate plan.
Bottom line: The SPX or $SPY seems to have still enough momentum to form a higher low in case of a bear break later this week. Only a clear loss of the key support of 208.78 could be a game changer.
The time zone we reference on our charts is Pacific Standard Time. Therefore, the U.S. cash market opens at 6:30 AM PST and closes at 1:00 PM PST.