ANOTHER PROBABLE FAILED REVERSAL
Yesterday's strong recovery negates an impulsive decline from last Thursday's high.
With only a 3-wave down leg I remain distrustful that the current move belongs to a reversal pattern (Corrective usually means that the main trend remains up).
In addition the internal structure of the rebound from yesterday's lod can be counted as impulsive therefore at lest one more up leg should be expected, consequently a recovery above the 0,618 retracement will reduce the odds that a larger pullback is underway.
Therefore if today bulls achieve a higher low they will most likely abort the reversal set up.
If this were the case then the Ending Diagonal idea I suggested last week would revive (A wedge is the only pattern that would make sense if price continues to unfold corrective moves both up and down):
In the technical front breadth and momentum indicators remain bearish biased suggesting that the unremitting up leg from the November lows is at least on shaky ground, but the recovery of the RSI above the 50 line (If it is maintained) reduces the odds of a reversal. Instead if SPX is still forming an ending pattern (The April 11 high is not the top yet) we should see a negative divergence in conjunction with the terminal wave up.
Lastly if bears have failed, VIX, which yesterday issued a "Bollinger buy equity" signal with a "bearish Harami candlestick will have to remain below the 200 dma = 15.45 (eod print).
Maybe the missing bullish pattern (bearish for the equity) is a large bullish falling wedge:
