Below is the hourly bar chart of the S&P Index futures near contract. The pattern into new highs regularly ensconced inside a rising channel provides the illusion of a ongoing rally. Atop are various Demark readings on the daily chart that create a prospective top here today.


Click here to enlarge.

The chart is an Elliot Wave stab on the same. The big drop to 822 that came in a 5-wave pattern is the key to this chart. That drop was the wave c of a larger degree flat corrective, marked as the yellow X, after completing the inner Y at that point.

From this drop of 822, this market has risen in 3 distinct legs, with the first 2 being choppy overlapping A and B waves marked in blue letters. The latest rise from the 841 area to a now clear 5-wave pattern, where today is the day for completion of the fifth of these, and of which 1,2 & 3 are definitely done.

One more high after the initial hour drop at most is where this market will go to before going and breaking all the way under the 780 area, which is where this highly under-bought rise began. The coming drop isn't marked to time scales, due to inadequate space on one screen for so much fine data. Such a sequence of no more than 2 down closes after any interim highs since the March 31 low does characterize a market that continued to rise in an under-bought state.

Tops don't happen because of selling, but because of buying exhaustion. Such an under-bought market, which rises with such an intricate inner structure of wave counts, can
continue to defer the final reversal, but today seems the deferral is not likely further without a drop into at least 862. That being the last low of the wave 5 of this latest C.

So, if this market does drop to 862 from the 2nd hour high of today, we will have to again work at finding the wave structure of this first fall. Until then, play well with this volatile rise.