The S&P 500
Normally, when we see a large gap in the S&P 500, we will go to the S&P 500 futures to fill in the structure of what occurred in the gap. But, when the Emini S&P 500 futures also gap 30 points, it leaves us questioning what the structure is within that gap.
Due to the lack of wave structure off the lows, we have to resolve any question by patience and resistance. If the market has truly bottomed already, it has begun a rally in exactly the manner in which the completion of an ending diagonal should. We can certainly consider this reaction as the "violent" type of move in the opposite direction we see at the conclusion of an ending diagonal. But, without the structure off the lows, there are too many questions.
So, we are going to be a bit more patient and look toward our lower resistance region. For now, the heart of the resistance seems to be the 2135-2140 area. I would want to see the market continue this move through that region as it heads toward 2180 to complete wave 1 of (iii) off the lows, based on Elliott Wave analysis. And, remember, if one goes to the sidelines here, the market will "likely" come back to the 2140-2160 region in a wave-2 pullback once wave 1 has completed. Often, when we break through resistance, the market comes back and tests that broken resistance from above before it continues in its larger degree move higher, and that is what we are expecting right now. It would also set up a very nice inverted heads- and-shoulders pattern to match that 1-2 structure.