Yesterday, the market surpassed my 2061 expectation and went to 2068.
Today, the market went lower than my 2051 expectation and went to 2038. This was a much bigger drop than I expected. But even so, it still has not broken support.
In order for further downside, support must be broken. Now, it did break in the Russell — but in both Nasdaq and S&P, the support still holds.
In terms of wave counts, the only bearish way I can count this is in green. Yesterday’s rally would’ve had to be a C-wave — but it falls much shorter than where it typically finishes. Usually it should get pretty close to the top of A at 2080 – but this is a good 10 points lower — so somehow I don’t have as much confidence in the green count.
The yellow is still technically valid –even as low as we went. It would only be invalidated once the support areas in the 2030/2035 region gets taken out. But if it continues to hold support, then there’s still possibility of going back up.
So even though bears had their day today, they can’t claim control until support is taken out.
The Russell made new lows -but Nasdaq and S&P did not.
Notice that both S&P and Nasdaq had diagonal patterns into May 6 — whereas Russell technically did not.
If that diagonal is an ending diagonal (as opposed to a leading diagonal) – then those lows from the end of that diagonal should not be broken. For the S&P, that’s at 2032 — and even with today’s drop — that still has not broken.
Same thing for the Nasdaq — the end of the Nasdaq diagonal was 4272 and we are above that at 4320 — so that low from the diagonal has held as well.
The Russell is permitted to make new lows and still bounce back up because it did not have an ending diagonal pattern into May 6. Now the question is whether it bounces or maintains pressure down.
We’ll see based on the action overnight.