SPX500 might still be working on its counter trend rally towards 3470/80 zone, before resuming lower again. The indice had topped through 3588 mark early this month and reversed sharply towards 3300 mark. Bears remain inclined to resume lower after the corrective rally terminates.
SPX500 had managed to produce a meticulous rally after printing lows at 2200 mark in March this year. The indice remained in control of bulls and rallied through 3588 high early September, before finding resistance. Also note that the entire rally could be sub-divided into 5 waves.
At a larger degree, SPX500 seems to have terminated Wave ((5)) around 3588 levels. If it holds true, the indices might be setting up for a meaningful retracement at a similar degree. Believe it or not, bears might be targeting below 2200 mark in the near term.
Also note that SPX500 had almost reached the fibonacci 0.618 extension for potential Wave 5 termination around 3604 levels. Keeping all the above facts in mind, it is safe to presume that a meaningful top might be in place at 3588 and that bears would remain in control.
Further, the drop between 3588 and 3300 might be a lower degree impulse, potential Wave 1 (not labelled on the chart here). The fibonacci 0.618 retracement of Wave 1 is seen around 3480/85 zone, which could be ideal for potential Wave 2 termination.
If SPX500 manages to reach 3480/90 zone, probabilities remain high for a bearish reversal. The indice should be targeting towards the next support around 3200 and lower respectively.
Short against 3600, targeting below 2200.