... draft in progress, subject to change ...
A key trend line has served as important resistance on SPX since its all-time-high in May 2015. The red trend line in Chart 1 connects the all time high and the next lower low. Since then, SPX has made three attempts to break above this resistance line, as shown by the red numbers in Chart 1.
The first two attempts have failed.
The current rally off the May low broke above resistance with impressive momentum for much of the past week, but fizzled on Friday. Friday's near 20-point drop also turned an otherwise up week into a slight loss.
Is Friday's sell-off the usual retest of the trend line or an indication of another breakout failure? The jury is likely still out.
We observed that swings in SPX since its all-time high are better tracked as three-wave structures (Chart 2). If this three-wave dynamic is still in progress, we would logically track the current high as
* the entire blue C-up. A large reversal has just started.
* [a]-up of blue C-up. The blue C-up is subdividing higher.
* all or part of [b]-up of blue B-down as shown by the gray labels. Once [b]-up is complete, [c]-down is to complete the large B-down, to be followed by the large C-up.