- The outcome of the pattern is uncertain
- Momentum and breadth indicators are suggesting that price has not completed the advance form the November lows
It is still possible but it looks less likely the scenario that calls for a temporary top at the April 11 high ===> Zig Zag in progress.
If this pattern is the correct one, the current up leg is a bearish wave (B), which will be followed by an impulsive decline (wave C).
Therefore I place 2 big question marks both at the April 18 lod and at yesterday's hod.
Yesterday I discussed several options both bullish and bearish that can play out if bears are not able to achieve an impulsive decline.
Today I add a new one, which calls for an Ending Diagonal wave (Y).
Usually in a wave (B) we should not see a breadth thrust, nor the RSI above the 50 line, a MACD bullish cross over and Summation buy signal.
- McClellan Oscillator has the stochastic overbought but no sell signal yet. Recall that as long as the oscillator does not cross the zero line bearish set ups are not viable
- The Summation Index has issued a "buy signal" by crossing above its 10 dma. The solidity of this bullish signal will depend upon if the RSI crosses the 50 line.
- The MACD is crossing over; the Stochastic is not overbought and the RSI is above the 50 line.
Nor VIX is suggesting that it is unfolding a bullish pattern, at least not yet. I have already discussed that the "fear index" could be forming a bullish falling wedge. If this is the case this pattern still needs a lower low.
Regarding the EW labelling of the current up leg, it unquestionably corrective but it not clear that it is over yet. Either way keep in mind that if the following pullback is corrective eventually it will be bought
I have two options, depending if 1577.90 holds:
1. Ending Diagonal wave (Y)
2. Double Zig Zag is over
Have a great weekend.