The cash S&P500 rallied on Tuesday causing the question to be asked: "Has the D wave of our contracting triangle completed?" I have two scenarios that describe possible price action over the next four or five sessions. Here they are:
1) The rally that began Tuesday becomes a choppy sideways affair the rest of the week and never exceeds 1481.49 (we closed yesterday at 1471.49). We essentially bide time into early next week.
2) The rally that began Tuesday is either already over or ends early today without exceeding the 1495 level. We then fall hard into Friday of this week breaking below 1439.29 (target of 1429) in the process. We then bounce into early next week.
Both scenarios can actually cover situations where the contracting triangle scenario unfolds to completion. However, only scenario 2 provides a situation where Wave "D" ends at a Fib ratio to Wave "B" and the entire triangle is in time symmetry with the move down between July 16 and August 6.
Therefore I choose scenario 2 for academic purposes. Not that it matters, for in either case the larger trend is now down and should remain that way over the next few weeks -- and yes, I know that the Fed will most likely cut rates next week.
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