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After the S&P 500undefined broke out above 2047 on Oct. 22, we noted that that move significantly weakened the bearish potential in the market. Although the current 'wave' down from the Nov. 3 high is not at all dead, one must still keep a very open mind about any potential bullish setup in this market.

On Monday, the S&P 500 broke through the bottom of the upward channel we had been watching in recent weeks. Even though the immediate, more aggressive bullish wave count broke (relying on Elliott Wave theory), it has left another in its place. So unless the S&P 500 follows through to the downside now with five full waves toward at least the 2035 area, we are going to be tracking this more bullish wave count very carefully.

For this to be in place, we're watching for the S&P 500 to move strongly through the 2083 region right now. Again, we still need to see a bit more action to be more certain, but if the market cannot take advantage of the current bearish setup to give us five waves down, then we have to continue to view this market from an immediate bullish perspective, which means the S&P 500 will be targeting the 2328 region sooner rather than later.

See charts illustrating wave count on the Emini S&P 500.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.