THE MARKET MAY BE ROLLING OVER

$SPX displayed a 5-wave down from 1,573 - to - 1,549, then a short pull-back upwards to 1,562, followed by another leg down, reaching this morning 1,539 at oversold levels on the hourly.

Interestingly, the market did not breach the 1,537 level we have been advocating for sometime now. Another characteristic of the market is that the bonds ($TNX) reached overbought levels today.

Now, we are in the midst of a leg upwards that started at today's low and will highly likely reach the 1,561 - 1,565 range.

What happens next at that junction (1561-1565) is critical.

If the market turns down again, then we will reach much deeper levels on the $SPX.

If the market breaks out above the recent high of 1,573, then we will reach the aforementioned 1,600-1,620 range.

The negative fundamentals over the last days, including the weak employment numbers today, suggest that the market may be rolling over to the down-side. If earnings next week starting with AA are also weak, we will likely move downwards. To this end, some large transports have already reported weak numbers and guidance thus far.

In conclusion, it is our current position that the market has began to roll-over to the down-side before reaching our target of 1,600's because of negative economic data. To this end, we believe we experienced the first wave down from 1,573 - to - 1,539 and we are due for a correction upwards to 1,561-1,565, following which we will head lower: First stop will be in the area of 1,500. 

A close above the recent high of 1,574 will invalidate our scenario