Here is a look at the two scenarios for the SPY -- the S&P 500 ETF. My preferred count calls for a climb towards 140 prior to the completion of the countertrend rally phase off of the January 22 low (126.00). However, weakness that breaks and sustains below 131.70 will be problematic and likely will trigger a plunge to new lows.

A look at the daily chart of the S&P 500 E-mini futures index helps support this analysis. Let's notice that all of the action off of the January 22 low at 1255.50 has morphed into a coil type of pattern, which either represents a bearish congestion period within the dominant downtrend, or a developing intermediate-term bottom.

My own pattern work leads me to the conclusion that the e-SPH may probe lower levels towards 1310 in the near future, but the price structure will NOT break down prior to first finding a way to recover to 1400, after which the dominant bear trend will attempt to reassert itself. Key near-term support rests at 1337/35, while key near-term resistance hovers at 1372 and 1385.