Well here it is Sunday evening, and I finally have some time to put a few thoughts together.
First off, Thursday saw a breakout of the triangle to a new high. The globex session high (approx. 1157 in the SPX cash) was never seen during the session and the high of 1154.5 that printed at the open was the high for the day. However, selling abated in the 1148 area (wed's high) and consolidated there until a rally in to the close. While the move off the high in the cash market only sported 3 waves, the 5 min chart in the globex session does show a 5 wave move down. So, I think that only leaves us 2 possibilities for Monday's options (although I'm sure the market will prove me wrong and come up with a 3rd one), and that is this:
5 waves complete. The thrust off the triangle has completed and we will begin at least a corrective move off of rally from the 2/25 low. Confirmation for this count would be an acceleration gap down tomorrow and a close below 1140 with 1134 to quickly follow. If the move is impulsive, then I'll look for a much larger move, even the possibility of the initiation of p3. If not, look for the move to run out of steam in the 1115 area before moving to new highs. Should the gap down occur below Friday's low and close, then that would lessen the strength of a bearish move.
5th wave extention. We saw the completion of the 1st and 2nd subwaves. The 3rd wave should be in full force on Monday with a gap to the upside and close above 1155 in short order.
With the market as overbought as it is and the rejection at the rally highs on Friday, I'm looking for scenario #1 to play out. Weakness in the Globex session appears to also be pointing that way. How far it will go is the more important question as it will determine the market's direction for the next several weeks.
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