SPX500 has raised through 3520 levels in the last few trading sessions. The overall structure continues to remain bearish until prices stay below 3600 mark. The indice futures are trading around 5490 for now and might have carved a lower high yesterday.
SPX500 long term wave counts reveal that a larger degree Wave ((5)) might have terminated around 3588 levels recently (early September). Since then, the indice has dropped through sub 3200 lows, terminating potential Wave (1) lower.
The subsequent rally towards 3550 might be Wave (2) and Wave (3) could be progressing since then. Further, lower degree Waves 1 and 2 might also have terminated around 3225 and 3525 respectively. If the above is correct, we should witness a sharp reversal lower.
Alternately, Wave (2) might be unfolding into a contracting triangle, which might take another 02 waves to terminate. Either way, SPX500 might be preparing to reverse lower sharply once larger degree Wave (2) terminates. A break below 3200 will confirm that a meaningful top is in place and that bears are back on control.
SPX500 had earlier dropped from 3400 through sub 2200 levels, which could be larger degree Wave ((4)) termination, as highlighted on chart. The subsequent rally has unfolded into 5 waves and managed to reach 3588 in September 2020, potential Wave ((5)) termination.
If the above counts hold well, SPX500 might be preparing for a huge bearish reversal towards sub 2200 levels in the next several weeks.
Bearish against 3600, targeting below 2200.