Sell in May? The market must have read my post last night. We almost had a 2% down day and approaching the 1181.62 level I am keeping an eye on to support my rectangle pattern.
As for the market action today, most of the options I have presented are still on the table. I had hoped that we would have resolved most of them today, but we did not. So I would still consider this a non-event.
The market appears to be chugging along in a sideways fashion supported by key MA levels. I still like my rectangle option right now among others. As mentioned above, I'm watching the 1181.62 and 1175.12 level. If we breach those levels, I will be paying particular attention to my Reverse Fibonacci chart for targets to the downside. At the moment 1170 and 1160 look like potential areas.
It should be noted that a potential head and shoulders formation is also developing. The neckline falls in line with my 1181 level. Should this pattern follow through, 1140 appears to be a target.
As far as bearish counts are concerned, all I have at the moment are 3 waves down from 1219.68. If the bear case is to truly take hold, a larger wave 3 should unfold shortly. This wave 3 down may target that 1140 area. That would place wave 3 at 1.618* 1.
Take a look at the Daily SMA chart. The 50 day looks like a good target at 1165 if we lose the 34 or a 38% retracement of Minor A takes us to 1150.
As for a major top? Until I see 5 waves down of minute degree and when the daily MAs cross I will not accept that a top is in. Perhaps if the market breaks the ascending trendline on the 60 minute EMA or weekly wedge chart and there is a MA cross-over, maybe it will get my attention.
Don't get me wrong, we are probably very close but until the evidence presents itself, why call it the top?
Will be looking forward to next week.