There is very little to add to the overall picture after yesterday’s action. The market came within 16 cents of adding confidence to the bear count, but did not. The action yesterday now forces me to give a slight edge to the more bullish count. The objective reason I feel this way is because in a diagonal, the peaks of waves 2 and 4 “should” be on the same trendline. Yesterday’s action will make that difficult for the bearish short term count.
So below is the slightly more bullish count, which has moved into the preferred role, and which anticipates that the market is now forming the fifth wave of the fifth and final wave up to complete the rally. The preferred target for this count would be 1342-1343 for the S&P 500 (SPX), though any print above 1333.47 would suffice.
The hypothetical leading diagonal bear count is shown below. This count hasn’t been completely eliminated, but with the diagonal sketched into the chart, one can see how the action yesterday creates difficulty for the trendline connecting the second and fourth waves of that diagonal.
Today is a non-farm payroll day, which means that bears should actually hope for a higher open. The majority of the time when the market opens higher on NFP days, it reverses and closes lower. A fair number of NFP days have also marked major and minor turns/pivots in the market.
In conclusion, based on the price action on Thursday, I’m now inclined to favor the slightly more bullish count. Trade above 1333.47 would add confidence to that count, while trade below 1321.41 would add confidence to the bearish view. If the longer term bear counts still hold any water, this should literally be the last and final leg of this rally, and an intraday reversal today becomes likely. Trade safe.