|SP500 3-Hr Chart|
So, from the 2301, level price retraced 78.6% (61.8% in the NQ) to the 2267 level. But, so far, wave Minor 4 has not been exceeded lower yet. And, the downward wave has taken more time to complete than the upward wave. So, the downward wave may be considered as corrective to the upward wave, even though it can be counted as a five-wave sequence. The downward wave can also be considered as a complex corrective (w-x-y) lower, based on the very small wave off of the top.
Therefore, unfortunately, we can make no firm statements about the nature of this wave yet. If the high is exceeded, it could be minute iii of Minor 5 that does that. If the high is not exceeded, and wave Minor 4 is, then downward counting may begin.
Today, we had APPL earnings which lifted the NQ futures in the after-hours (but not to a new high, yet). And tomorrow is both the first day of the month - which sometimes sees price gains from the inflows from retirement accounts, dividend reinvestment plans, 401k's, company bonuses, etc. - and it is a Federal Reserve policy day. And Friday is the payroll employment report. So, new highs are very possible, and so is a reversal on one piece of news or another.
As a result, we make no assumptions at the moment, and simply count waves until something looks completed in one direction or the other. We do see that there is an "island top" leaving two open gaps on the above chart, and it is certainly possible that one or both fill.
Best wishes in the chop and whipsaw-type market conditions.