Momentum of this impressive upswing is now waning and negative divergence is present on the daily SPX chart. We track the recent high at or near the end of a potential ABC-up or A-up (Chart 1). A potential ABC decline is likely looming. The gray path in Chart 1 tracks a small-degree ABC decline, and the blue path a larger degree ABC decline. The 2020/2040 area likely offers (initial) support.
The 30-point drop in SPX this past week presents a potential five-wave decline (Chart 2). Hence, the pullback may be in progress. Confirmation is needed as price patterns can support a minor higher high near term if the market chooses to do so (Chart 3 and Chart 4). Either way, a larger pullback is likely in sight.
