The market has traced what appears to be wave 1, 2 and 3 down from 956 peak. Wave 4 should be in play and what is needed for the bears is another wave lower to complete the first 5 wave pattern of any significant decline lower. My 5 minute chart shows what this first 5 wave move might look like.
However, I haven't yet abandoned the last ABC to a P2 peak primary count. The "uncle" point for labeling a Minor B wave would be the about 914 SPX and that would have to show signs of a bullish reversal such as a falling wedge, ending diagonal or positive divergence in any 5th wave push lower.
The VIX shows a falling wedge pattern and an upper trendline has been obeyed for quite a while now. VIX shows the fear factor. It is on the cusp of the upper line. A clear break and hold over the line is bearish for the market.
My 60 minute chart also shows the SPX is at a key RSI support line. This support has yet to be broken the entire rally. Its just an interesting observation I am not sure how significant this support line is at this stage.
Total volume was not too high, at least on the SPX cash index. So sellers have yet to come out in droves. Just lack of dip buyers for now. But volume of course may pick up with a break of the VIX upper trendline.
I do not like to get "stuck" on counts and ride them into the ground. But 914 was always my "uncle" point for a B wave low of an ABC to P2 peak so no need to change that just yet although confidence is very low because the waves are not really supporting that count with a high degree of certainty. Thats why I am keeping a close eye on the bear wave 5 wave structures down. I am a permabear afterall.
As a side note the SPX gap that existed was not quite closed. Less than a point left.
Here is what I am thinking in my 2 basic counts:
1) If this is the first 5 wave pattern down in a big 5-3-5 zigzag, then your looking at the first 5 wave pattern to end either at 914 support or the 200DMA and a bounce that may retrace back up into the high 920's or more. Then another big 5 wave move down toward 878 support completing a 5-3-5 zig zag.
2.) This is NOT a significant decline and merely a "B" wave low settling in a final ABC move to P2 peak. This count would support the notion of end-of quarter window dressing and the final dip buyers buying these last dips. This B wave low realistically cannot go much lower than 914 SPX.