The market could be done. We have reached the 90% threshold for a regular flat. The wave structure looks complete or nearing such, and while the horseshoe/candy-cane shapes the market has been making intraday the past couple of days have been touted as manipulation, one could just as easily think of them as distribution selling of those who bought the dip the previous day at the close. Notice that today we had three solid hours at the end of day of red candles, even if the day overall was more bullish than yesterday.
The full Nasdaq Composite (as opposed to the NDX) filled its gap today, and at any rate gaps in most indices are now more numerous to the downside than to the upside. The VIX rallied, and moreover UVXY led with a more significant reversal than the VIX itself (UVXY leading VIX?), closing back above 6.00. This may foretell further upside in the VIX, and thus downside in the SPX, to come.
Additionally, the SPX stochastics dropped drastically and may go out of hourly overbought condition shortly. But again, we're two days early in time. We may need a little more upside before the down.
Bears should be looking for a breach of the blue line (1422-1415), and ideally of the red line as well (1370s). The best case scenario for the bulls is a retest of the blue line that fails to penetrate substantially followed by a vigorous rally upwards.
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