The SPX closed yesterday right at an area of resistance that has held it back over the last few days, having earlier on, bounced off gap support (shown in close up on the 1 min chart I posted not long into the session). Here is a 60 min chart showing the point we have reached:
SPX 60 min chart - support and resistance:
The question now is will it make it through that resistance this time and get into that area of price void that exists between 1100 and 1110.
Two of the wave counts I posted last night suggest we will.
On the double zig zag count however, doing so may mark the end of the correction that the double zig zag represents, although I have shown a wave count (see Options 1 and 2 on the 60 min counts page) which raises the possibility that we could go on to push above 1110 and possibly beyond 1131.23, even on a minute [ii] or minuette (ii) correction.
On the count showing 5 waves in progress from the 1 July low (see the Option 3 chart from last night) we could easily break through and into the void, if not beyond before we see a meaningful pullback in a [b] wave. If we had a wave (iv) low yesterday as I've labelled it, wave (v) would be a 1.618 extension of wave (i) at about 1111, so we might see price fill the void then fall back quickly as it begins its wave [b] retracement. So, filling the void and reaching the next area of congestion would only be a temporary stopping point on this count.
Given the late day run up, most people are probably expecting new highs for the rally to follow. Perhaps this is where the market will catch most by surprise and just drop from here - that's what is suggested by the expanded flat wave (2) count in last night's update.
As unlikely as it may seem at the moment, you never can tell with the markets. That's why, until that count is invalidated by price action, for me, it remains on the table. To have any confidence that this count is in effect, we'd need to see pretty much an instant drop and then quick progress down to and through the 1085 - 1080 area and, ultimately, 1070.
