SPX500 might have just turned lower towards its larger trend, which is down. The indice had managed to barely hold below the 3400 mark yesterday and reversed sharply after hitting 3399 levels respectively. Look lower from here.
SPX500 potential wave counts are as follows: The indice had earlier dropped from 3400 to sub 2200 levels, sub dividing into potential 5 waves. The impulse drop has been marked as Wave (1) on the chart here. Ideally, an impulse is followed by a corrective wave on the opposite side.
SPX500 produced a religious counter trend rally towards 3399 levels yesterday before reversing lower again. This termination has been marked as Wave (2) on the chart. If the above proposed structure holds well, SPX500 could be well under its way towards 2200 as Wave (3) unfolds.
Alternately, SPX500 could be producing an expanded flat not labelled here. The earlier drop between 3400 and 2200 could be marked as Wave (A) of a larger degree. The subsequent rally towards 3399 could be seen as Wave (B), which exceeded the extreme by a few points.
Either way, SPX500 might be setting up for a dramatic reversal towards 2200 levels going forward. An expanded flat structure would complete near 2200 lows if not further. The indice is on the verge of breaking below its support trend line from March 23, 2020.
Traders might be inclined to remain short from here, with protective stops just above 3400 mark and projected targets below 2200, going further. Pushing above 3400 from here would delay matters further.
Technical Analysis Team
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