One Hit Wonder?

Good Morning:

• Balance Rules will be tested this morning, as yesterday’s decisive rejection of the 3975 Price resistance disappointed the bulls. For our flagship trading index, the S&P 500, the Balance Range is roughly 100 points between 3800 and 3900.
• The top of the Balance Range is 3912. Our risk today is that when price breaks out as yesterday and then falls back into the Balance Range, it typically goes right back to the lower end of balance (3800). See Balance Rules.
• But the Daily Mean and/or FIve-Day Stop Line could catch any fall into 3895. And that leaves us with a bit of a opportunity. We have a simultaneous break-out retest of of the Balance Range high around 3912, and both Mean and Stop Line tests just below 3900. Will buyers show up on these pullbacks?
• The Founders’ Group views this zone between 3895 and 3912 as a low, risk to stop entry zone, even though failure at the zone calls for a 100-point sell-off. The key is the right stop to prevent joining the full decline if the tests fail.. 
• So the Founders’ Group will add to the Navigator Swing long position if price reaches the entry zone, setting a one or two ATR entry stop. We won’t lose very much if the trade fails, and we could take the failure as a short signal with the aforementioned 3800 target.
• As planned yesterday, the Founders’ Group scaled back to a runner (small position) for the swing strategy when price reached 3975. We will handle the runner the same way we handle adding to the existing long position in the buy target zone. If our stop triggers, it triggers on the entire position and we can either short or go to cash.
• If the Balance Range holds, price will likely test 3975 above one more time. If that level is conquered, price can potentially reach up to 4025, a 2.618 extension of this rally’s seed wave. Given that the Balance Range is 100 points, a successful retest projects a 100 point measured move up to 4012.
• On the down side, If 3800 is realized, the topping pattern identified yesterday morning takes form and the bears have an edge. See the Door Number Two second chart above. The topping pattern’s measured move down is 200 points or more, and likely the October 2022 low (3502). If some doomsayers are correct, it could get even worse.
• Recall that from an Elliott wave perspective, the bears still argue that we are in a draconian “3” Wave down.