As you know in my opinion SPX has not established a major top at the April 2 top, instead it is involved in a corrective pattern that could/should extend into the month of August with a pending wave (C) down and a potential target in the range 1248 – 1207
This expected wave (C) down could be the candidate to establish the end of the corrective pattern; hence price should resume the intermediate up trend.
Probably XIV is one of the best charts that meet all the necessary EW requirements that should match up with my preferred SPX scenario.
XIV is the inverse VIX etf, therefore the price raises when VIX drops therefore this etf has a 100% positive correlation with SPX.
If we analyze the internal structure of both the down leg off the March 26 top and the up leg off the June 4 low we can conclude:
- The down leg off the March 26 top has traced a corrective EWP (Potential Triple Zig Zag).
- The up leg off the June 4 low is also tracing a corrective EWP (Potential Double Zig Zag)
If both moves are corrective then we can conclude that the price of has not established a major top, instead it should be involved in a potential 3 wave down leg (ABC) that in this case could be unfolding a Flat with a pending wave (C) down that could bottom at the June 4 low or a more complex contracting pattern that could unfold a bullish Triangle.
For the immediate time frame, if the count that I am following is a double Zig Zag then the wave (B) is not over yet as a pending wave (c) up could reach the equality extension target at 13.
If price closes the gap at 11.25 then this short-term bullish scenario could be jeopardized.
If XIV has one more up leg in the cards in order to complete the wave (B) then SPX should do the same.