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Corrective Pattern Still in Progress?


In the aftermath of yesterday's truncated decline in reaction to surprisingly weak economic data, the E-mini S&P 500 pressed to a new reaction low at 1626.25 -- a full 3.5% off of the May 22 high at 1685.75 -- prior to staging a recovery rally back to the 1635/40 area.

The question now is whether or not the "ISM spike low" at 1626.25 ended a correction, or whether it represented the mid-point of a larger developing corrective process.

Let's notice that the index has recovered right to the lower side of its recent breakdown plateau between 1655 to 1640, which remains intact.

In the absence of upside continuation that hurdles and sustains above 1650/55, my instincts are telling me that any forthcoming strength represents an "intervening" rally within a larger, still-developing complex corrective process that will resolve itself in another downleg that breaks 1626.25 on the way to 1600 prior to completion.

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