The corrective rally has extended this afternoon almost breaking above the start of a 5 wave decline which now opens up much higher levels to be achieved potentially. As I said before, I don't feel a significant long lasting bottom is in the market yet so the larger trend is still down. So the market can crash at any time. I posted a 4hr S&P futures chart above to show a large 5 wave decline that should hold as long as the trend is still down toward lower levels.
On the chart I have the fibonacci retracement levels mapped out and project a rally to the 38% fibo area at 790 which is also the area of the previous 4th wave, which oftentimes halt the correction. If it breaks out form that congestion area, then the 50% fibo will be in sight at the 806 area. The market should not rally much higher that this area here. Any strong rally and close above 820 will call into question the bearish case that new lows will still be achieved in the short term.
With today's rally into positive territory I exited all my short positions near break even. Once the market hits my target areas I will begin to reshort again. Until then, I'm on the sidelines watching.
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