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For the last two months, the bulls and bears have been battling it out to determine if the market is heading to new all-time highs, or if it's going back down to the August lows. And over the last two days, the battleground has narrowed.

Over the last several days, the S&P 500 has completed a 5-wave structure off a support level. If that low holds as support, then the bulls will take the market up to new all-time highs and potentially over 2200 within the next two months. However, if this week's low is broken, then we are likely heading back down towards the August lows, and may even break it, depending upon the structure of the decline.

After peaking at the open Thursday morning and completing the 5 waves up, the S&P 500 is now pulling back. If we are heading to new highs, which could be seen as early as next week, then the market should not break down below the .618 retracement of the initial 5 waves up, which resides at the 2025 level. However, should we break down below that level, and follow through below 2012, it makes it highly likely we will break down below this week's low and begin to target the August lows.

So, the lines are drawn: Thursday's high on the upside, and this week's low on the downside.  The first to be broken will likely declare the victor in this multi-month battle.

See charts illustrating the wave counts on the 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.