Over the past week the S&P 500 & the DOW have been on a roller coaster ride. Both indexes began last week with very strong rises only to have a significant drop off going into the weekend. Whilst last night - 6th Oct, the market rose strongly for the second day in a row.
The danger with this market is the focus on "not so bad news" and how the market makers seem determined to push the market up despite the constant feel that the market needs a rest or pull back.
In the S&P chart above, the price has just finished a major wave 5 sequence and seems primed for a retracement. If we assume the wave count is correct, then the first target is for the next wave 3 at around the 827 - in fact the market could retrace into the zone between the previous wave 4 at 880 and the Fibonacci wave 3 target at 827 mark.
Once this target is hit, a new wave 4 would see the S&P retracing back up into the vicinity of 955 with the final and rather significant drop in the S&P down toward the potential wave 5 low in the vacinity of 670 mark.
Scary targets indeed if Fibonacci can be believed.
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