Market is extremely overbought; there are 3 scenarios for coming weeks. I will give you all the possibilities and I would tell you which one I think has the biggest potential.
First scenario:
S&P500 would roll over in coming days. It should tank to 1085 or as low as 1075. It’s critical for bulls that 1075 level holds. I think this scenario has the highest probability.
Second scenario:
S&P500 moves above 1131 for a couple days then it gaps open lower this is the last thing bulls want to see in this case S&P500 should tank to 1085 or lower.
Third scenario:
S&P500 grind higher with out any reasonable pull back in this case it could rally to 1170, then rolls over.
On the Elliott wave analysis I could suggest a new set up. There is a good possibility that we did not start the sub-wave (3) yet. Therefore wave (2) could made of the a,b,c pattern. If S&P500 violate 1075 level it means from July to mid-September we were in wave (2). This would be a nightmare for bulls. Because wave (3) is the vicious of 5 waves structure. Please note there is an alternative for wave "C" it could end as high as 1170.I pointed in the chart as [alt-c]. If S&P500 breaks the 1075 it means the (a,b,c) pattern was accurate and the wave (3) should end somewhere between 1010 to 950.
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