SPX500 has reversed as expected from yesterday’s high around 3180 levels. Make no mistake of taking the pullback at the close as the drop is complete. The indice has just begun on the south side and it has a long way to go, with initial target towards 2700/2800.
The indice had dropped from 3400 through 2200 between February 24 and March 23, 2020. This drop was clearly an impulse wave, labelled as Wave (1) of a larger degree. Usually, an impulse wave if followed by a corrective wave but in the opposite direction.
SPX500 rally from 2200 lows on March 23, 2020 through 3230 highs on June 09, 2020 was a classic example of a corrective zigzag. The rally had managed to reach fibonacci 0.786 retracement of Wave (1) as well, a typical guideline of Wave Principle.
The termination at 3230 can be labelled as Wave (2). If the above larger degree counts hold well, SPX500 should ideally stay below 3230, going forward. Also, the indice should prepare for a dramatic collapse lower towards 2200, as Wave (3) of similar degree unfolds.
Any counter trend rallies from here should be seen as an opportunity to initiate fresh short positions towards 2200. The long term picture of most Global Indices is looking gloomy for now and any kind of revival or long positions are better avoided.
Looking into the drop from 3230 through 2960, it was again in 5 waves, making an impulse. As expected, the subsequent rally was corrective and managed to reach 3180 levels yesterday. If the above lower degree counts hold, SPX500 is set up for a collapse.
Short against 3400, targeting 2200 over the long run.
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