The rally in the major indices has been impressive over the past two trading days, but the timing of the low last week was NOT within our expected Fibonacci band of dates. Nor do we think this market can simply run away to the topside. At best, more work is needed and a retest of our lows into late October. At worst, we see the Fibonacci rhythm of the S&P 500 60-minute chart below calling for a final plunge for this move to 1241.

Chart produced using Advanced GET End-of-Day

Where will we be wrong and start to question our interpretation? As previously discussed, if prices start to rally ABOVE 10,305 on the DJIA would be one warning signal. Another would be if prices achieved a close above 1420 on the cash S&P 500. This is where the 200-hour moving average resides, and the .618 retracement level from our extrapolated 1241 low. If we get a close above 1420, we'd stand aside. Until we do, further pressure to the downside must be assumed, regardless of the early signals that this market is trying to act better. Indeed, a downdraft now might do more to finally break the stubbornly bullish sentiment (of denial?) out there despite everything that has transpired to this market in the last seven weeks.

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