Stock markets dropped today, some more than others, in a probable initial reaction to those Fibonacci levels that were being tested yesterday. However, they descended toward support levels like the SPX 1087 area. Interestingly, the SPX hourly 34-ema was rising to that level as the SPX descended to it, closing close by that support test. This leaves alive the potential that this was a small 4th wave correction that allows more rally potential higher. What are some levels we want to watch? If the SPX dropped under 1082, that would be a real bearish break that might say it's done. But the dollar index didn't solidly test on or under the 74.75 level, and it remains possible for it to do one more "c"-wave type plunge there. So even though there are signs of deterioration, we shouldn't pretend that there's been confirmation the top is in ... because we don't have that yet.
Below are daily and monthly charts of the transports, one of the indices that made a lower low and didn't yet make a higher high. I'm not expecting a higher high (but if it did, that could be bullish). It's an example of the divergence among indices that helps remind us that, once we get confirmation of the B wave top, we can be prepared to be more defensive.
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