SPX500 might be preparing to correct lower towards 3400 levels at least before finding support again. The indices remains vulnerable for a sharp decline towards 3200 mark as well but we shall update that probability later. Bears remain inclined to stay in control from here.
SPX500 had dropped through sub 2200 levels in March 2020. Since then, the indice has managed to carve an impulse wave through 3670 levels. The sub divisions are clearly 5 waves at a larger degree, which indicates a potential corrective drop ahead.
Also note that the recent rally between sub 3200 mark on October 30. 2020 and 3670 is also clearly an impulse, leaving enough room for a corrective drop at least towards 3400 levels, if not further. It remains to be seen how the indice reacts through those levels, going further.
Both the counts presented above remains valid and probable in the next few trading sessions. Either SPX500 is expected to retrace the current boundary between 3200 and 3670 OR the entire rally at a larger degree. Another high remains a remote probability for now.
SPX500 potential wave counts also suggest that a larger degree Wave ((5)) might have terminated around 3670 levels. If that holds well, the indice might be preparing for a similar degree corrective drop, going forward. Bears might be prepared to sell on rallies from here.
SPX500 remains a good reason to sell around 3570/3600 mark with risk around 3670 respectively. A break below 3200 will confirm that bears are back in control and that a meaningful lower top has been carved already.
Short against 3740, targeting 3400.