If my short-term scenario is panning out then we are getting close to a substantial retreat, which will not endanger the intermediate up trend but should result in a 4%-6% pullback.
We can raise the SPX pivot support at yesterday's lod which coincides with the 10dma = 1514.02.
If the Ending Diagonal project that I have been following is correct then once it is complete (It needs the final wave V) price will carry out a sharp decline to where it began = 1498.49 where probably bulls will try to mend the likely trend reversal. Once a lower high is established then we will have the confirmation of the overdue trend reversal.
Below 1498 there is only "white space" hence I expect a quick move towards the next support zone at 1474.51 and if the large Ending Diagonal, that atm is my preferred count within the long-term options is correct, price will have to break through this support (As I need the overlap with the assumed wave (I) established at the September peak) hence if all the above is accomplished then the expected wave (IV) ed pullback should establish a bottom either in the range 1465 (50 dma) - 1455 (0.384 R) or around 1434 (0.5 R).
Lets move on to the shorter time frame.
Yesterday we got the expected Zig Zag down but the wave (C) was really shallow, fortunately by the skin of one's teeth (0.39), price overlapped with the assumed peak of the wave (I) of the ED project. Therefore the ending pattern is "kicking and alive".
Technically the pending wave (V) could extend up to 1540.22, but I doubt that bulls have enough shorts to squeeze and achieve such an overshoot; instead I remain open minded as even a marginal higher high or even a Double Top could take the majority by surprise. Probably the 1528 area could be a sweet spot for the top.
Yesterday's bounce off the lod, with an overlapping internal structure may have unfolded a "fricking" Leading Diagonal wave (A). If this is the case, today price should carry out a corrective pullback wave (B) with a potential target in the range 1520 - 1518 from where the last wave (C) up should complete the ED (The assumed wave V of the ED has to unfold a ZZ). The extension target is located in the range 1519.65-1517.50.
Today I suggest to closely monitoring the DOW since it is now lagging badly, and, if as it seem likely, price is also unfolding an Ending Diagonal, the wave (V) is still too short. Actually given the lack of strength the DOW could be the candidate for a Double Top.
NDX has also to clarify its ending pattern.
On Wednesday I suggested on Stocktwit/Twitter that QQQ, from the February 4 reaction low could be involved in unfolding the last Zig Zag up which would complete a Triple ZZ off the November lows (As long as the gap at 67.30 were not closed).
This count is still valid:
But we could make the case that also NDX is unfolding an Ending Diagonal, in which case a marginal new high could establish the top of a Double Zig Zag off the November lows.
What is still missing is a reversal pattern of VIX, which at the moment remains "fearless". At the moment I can only guess that if SPX has almost finished the ED, VIX should unfold a Double Bottom, which has a target at the 200 dma = 17. But at the moment it is just a speculation.
Yesterday I mentioned that I was looking for a "clear" candidate for a swing short and I suggested to FAZ and VXX, unfortunately I don't see yet a confident reversal pattern, therefore I will stick to the SPXU idea of doubling the size of the long I already own and look at QID as a second swing long candidate.
I remain on the look out for a reversal of FXY.
In addition IWM could also offer a swing short setup opportunity (Long TZA) if as it seems probable price is in the final stages of the wave (V) upward thrust out of a Triangle.
I am also monitoring a potential swing long in GDX. If the Bullish Falling Wedge scenario that I posted yesterday on Stocktwits / Twitter pans out price could begin a countertrend rebound with a target at least at the gap = 44.56 although I would not rule out something more maybe a kiss back at the 200 dma.
Below I show you the GDX chart with the wedge almost complete (Price is not updated. The eod price = 41.36).
Have a great weekend.