I mentioned yesterday that Friday's 2710.89 high likely completed Wave C of a corrective sequence, and that a move lower was likely. The SPX did open substantially lower this morning, hitting 2401.57. From there the index moved higher. That rally attempt failed, and the SPX closed near the low of the day of 2380.94.
That low took the index into oversold territory, and continuing my count, that would be Wave D of the corrective wave. If so, the SPX should rally off this low. As I have mentioned the first, third, and fifth wave of each sequence develop a specific relationship. With this being the fifth wave of the sequence, I can project a target for this wave. Assuming my count is correct, this wave should terminate between 2537 and 2666 on the SPX. At the termination of this wave, the SPX should once again move lower. So what I would be looking for is the SPX to move into the 2537-2666 range, and hit an overbought reading on the hourly RSI. A move above 2666 would indicate an alternate count, and the SPX would likely continue to rally.
There is a possible count that would make today's 2380.94 low the completion of a 5 wave sequence lower, and possibly at least a short term bottom.
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