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SPX Update: Will the Market Break This Pattern?

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This pattern has repeated since the October 2011 low. Will it continue?

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The preferred count for the SPX still has the active downside target of 1470-1473. I went over the one-minute SPX chart in detail tonight, and it is possible that the market has completed an ABC fourth wave correction in its entirety (hence the alt: 4), but I presently view that as the underdog. And, as I just noted, I'm having trouble simply assuming we'll even have a fifth wave up. The annotation from yesterday still sums up my approach right now.


Click to enlarge

Finally, a short-term chart of the Dow Jones Industrial Average (INDEXDJX:.DJI), which staged a pretty solid snap-back yesterday. The chart is simply for aid in identifying potential support and resistance areas throughout today's trading session.


Click to enlarge

In conclusion, if it weren't for the market's behavior over the past few years, I would normally be reasonably confident in the idea of a fourth wave decline now underway, and a fifth wave rally still to come. But given the three-wave nature of most rallies since 2009, I am continuing in my cautious stance until I see more signs of an "all clear" from the market. Trade safe.

Editor's Note: Today at 4:30 p.m. ET, Minyanville is hosting a free webinar with Buzz & Banter contributor Peter Prudden, who will give attendees an in-depth look at his macroeconomic outlook and trading style. To sign up for this free event, click here and hit the register button on the upper-left side of the screen.

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No positions in stocks mentioned.
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