SPX - ABC. Allowing Bank Capitulations? 25/02/23

We could be setting up for a classic deep ABC pattern here. Since my last post of a WXY count, it seems that we instead finished a 5 count as previously shown:

Since previous low, price has formed a convincing ABC correction to where we sit now. No move down is technically confirmed just yet but there's certainly an increasing probability day by day that this count can come to fruition.

Let us not forget what happened in 2008:

There's also the hot topic of inflation rebounding. Did the FED ease off the pedal too quickly? Maybe. Just Maybe.

This is not financial advice and always DYOR.

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I'm aware I've plotted the wrong extension here (didn't save or something along those lines) but the correct extension is just as deep and actually slightly lower.

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Posting a corrected chart here for future reference.

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We could be pulling off a classic ABC here:

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Potential that we have put in a local top here. Presenting Option 1:

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Mapping out other plausible scenarios here. Here are Option 2 and Option 3. Both are possible if previous local high breaks. If it does; the further the extension of wave 5, the larger the correction and following wave C will be.

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Coming into FOMC on expectations of 25bps. On that scenario, Option 2 seems to be the most favourable currently. Option 1 is not yet off the table - it can play following either of the other options, providing they finish as a corrective wave.

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I see it quite likely that we get one more test of 4040 or higher as per options 2 & 3.

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An update on where we are. This correction is starting to get a little heated. As we have now reached above the top of previous wave A, we can start to account for probability of a nearby local top increasing, due to this ABC being realized. There is a plausible 5 wave count for this current wave C on the hourly chart however it is still possible to extend this wave further upwards.

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A good place to update; we have reached the top of the option 3 projection, as well as an full extension of the initial wave A of the correction (4143). If this count is to be validated here, I will be looking for signs of exhaustion, local top, entry of large volume etc:

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This could be quite an important moment. From the ~4143 level (marking a 1 fib extension of initial wave A), we see spikes of volume on a rejection as well as a plausible 5 waves for the completion of a wave C. Monitoring the situation further.

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An interesting development. A plausible count for a finishing ABCDE 5th wave, following the extension the potential 5th shown in the previous chart:

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We may have a successful breakdown of the rising wedge, following the potential finishing ABCDE 5th wave. Probabilities of the previous option 1 are now heavily increasing.