If the trend channel gives way in the cash market, even printing a couple of full hourly candles below the lower trend channel boundary in the chart below, then it likely means the up movement is over. And there will be one, clear, unambiguous Elliott Wave count that results.
|S&P500 Cash Index - Hourly - Trend Channel and Divergence|
Yes, there is an outside chance that the futures will lurch up one more time in the overnight, but this is not required for a completion count in cash.
The unambiguous count will be that the third zigzag, Minor Z, of Intermediate wave (B) will have been completed. The market would have topped in a "three-wave sequence".
There are already three points of divergence in the minute ((c)) wave versus the Elliott Wave Oscillator, and the ((c)) wave is between 0.382 and 0.500 x ((a)) at this point.
If this top occurs, then the 2,720 level will likely be revisited quite quickly. Confirmation would come with an overlap of the minute ((a)) wave. Further downward movement would be pending a break of those lows. For now, as usual, let's take things a step at a time, and remain patient, calm and flexible.
This is another good session to monitor the overnight futures and keep a close eye on things. As we said in the previous post, the Dow futures already threw off one kind of invalidation (that of a continuing contracting diagonal). And, as Erik B. and I were discussing yesterday, the smaller diagonal in cash could have finished already.
Why would this count be an unambiguous one if it plays out? It has to do primarily with the 'depth' of the minute ((b)) wave. It really has too small of a retrace on the ((a)) wave to be a second wave. It's that simple. And, in addition, there are virtually no significant retracements in the wave up to June 11, which almost assures that wave is one of those no-retracement A waves, and not a first wave.
So. Be careful. Keep an eye on things. Have a good rest of the weekend.