Over the last few months there have been breaks below support levels with no downside follow through. Ravenous buy the dip bulls quicky rushed in creating only marginal break throughs. Friday 09/10/21 the S&P 500 (SPX) broke below support noted in the prior post “Important S&P 500 Support”.
Monday 09/13/21 could be an important test for the bulls. If they start buying early in the session and maintain the rally throughout the day, it could be the start of a multi-day rally to new all-time highs. A strong decline on the open 09/13/21 with sustained selling implies at least a multi-day drop.
The SPX 30- minute chart courtesy of Trading View updates the prime Elliott wave count.
From the supposed truncated Minor wave “5” peak made on 09/03/21 the SPX appears to be forming an Elliott wave series of “one’s” and “two’s” to the downside. If this count is correct its very bearish and implies a strong gap down open on 09/13/21, followed by sustained selling throughout the trading session.
Note the strong moves up on the open of the 09/09/21 and 09/10/21 sessions, Minute wave “ii”- boxed, and Minuette wave (ii). The bulls quickly ran out of buying power, the rallies were completely retraced, and the SPX finished the session near the lows of the day. This could be a subtle hint that sentiment has shifted, and the bears are now in control.
Traders are holding short 150% non-leveraged SPX related funds. Continue holding short.