S&P500 fell sharply last week from 1597 and found support around 1536 from where we have seen 20 point rally on Friday. Notice that market reversed from swings lows made in early April, that caused a recovery towards 1565/1575 Fibonacci resistance area. We believe that this pull-back represents a wave 2/B as we labeled a decline from 1597 as a leading diagonal in wave 1/A. As such, traders need to be aware of a new sell-off on this market into wave 3/C through 1530 area. A broken trend-line connected from December 31st can also become a nice resistance in wave 2/B around 1565. At the same zone we also expect to see a top formation of a right shoulder of a bearish H&S pattern. Meanwhile invalidation level remains at 1597, so as long this level holds we will look lower.
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