Another down day for the S&P. Yet via Sentiment Trader, bullish and bearish extremes are both only at 5%, which means there does not exist very much bearish extremes in order for the market to climb the "wall of worry". Its just not there.
Since the wave structure sports 5 waves down and a choppy overlapping rally since this lackluster sentiment data favors the bears.
Additionally we can see the S&P has breached the 1335 level. It closed just under 1335. We can see the market thinks this is an important support level. Its been dancing around that price point for 2 months considering also the price action in Minor 1 down.
The main point is that prices are obeying a down channel. If prices can break up and out of the downchannel, then we can probably identify a wave (ii) of Minute [i] of Minor 3 down.
So again, the best way to chart the squiggles at the moment is pay attention to the channel. Obeying the channel means an impulse sub wave structure is still unfolding. Breaking up out of the down channel likely means a wave two - specifically (ii) - is occurring and will retrace a portion of the decline.
The dollar has at least a 5 wave impulse up from where we marked wave [ii]. Back in January 2012, it was surmised that the dollar was long term bullish. It has been more choppy than anticipated, yet the trend is clearly up.
Sentiment is once again very high on the dollar, but timing the next pullback could be tricky.