SP500 saw a 1.9% pullback form its record high this past week (from 1813.55 to 1779.09). Furthermore, the pullback counts well as an impulse wave with alternations between waves two and four. The subsequent rebound has also reached the right shoulder of a potential larger head-and-shoulders pattern. Further downside is expected based on this scenario. As such, the 1750 area becomes an initial downside target. See
chart 1.
However, the pullback in NDX is very much corrective, further validated by its subsequent recovery higher high! See
this chart. So one also tracks the near term bullish scenario which is a small degree fifth wave in progress - see
chart 2 (SPX) and
chart 3 (INDU).
