Consolidation or topping?

Certainly there could be cases made for both, so I won't go into either of those today. What I do see are some very important things to watch for.



Bulls
The bulls have much more to prove. Not only do they need to push to new highs tomorrow morning, but they need to hold new highs into the close. Anything less will 'reset' the pattern to the downside and increase the odds of an impulsive move down. The fact that the breakout has yet to be confirmed (no 2 up bars in a row closing in their upper 2/3rds) increases the likelihood of a breakdown. A solid breakout should have put the SPX 30-50 points higher by now.




Bears
In order for there to be a continuation move off of today's downthrust, the bears need to hold the bulls to the SPX 943-946 zone. Even though we got back to back impulsive moves there were only two of them and they appear to be a fully qualified a-b-c move. Since this is a 'B' wave we can certainly kick it off with a corrective pattern so nothing is lost yet. If the bears can't hold that zone, then new rally highs are likely. If bears hold the zone, then a break of SPX 930 should be enough to push us to new lows and begin the chain reaction breakout to the downside that I've been watching.