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The structure of the S&P 500's (^GSPC) decline now looks like an almost full 5 waves (according to Elliott Wave theory) down from last week's high.

As long as the market remains over the 1965-1970 support zone, we "should" see a retrace take hold into the end of the week, or even into early next week, before stocks continue lower.

Due to the bulls' failure in their strong setup last week, the bears now have the ball as long as the S&P 500 remains below 2082, and, more specifically, the 2030-2060 resistance region. That is the region that should be tested in the retracement.

Should the market break below 1965 sooner rather than later, that would open the door to the 1905 area next, and the S&P 500 could potentially go even lower. But, for now, we should expect the setup noted on the 5-minute chart into next week before bigger downside takes hold.

For now, 1989 is the initial resistance, which must be broken to the upside, with follow-through over 2002 to get the ball rolling higher.

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.