While the selloff in equities seemed to be averted with a 3 day rally into the weekend, there are now several clearly negative divergences that have set up. The MACD, MFI, RSI, and Volume are all indicating that the rally over the past 3 days will fail. That doesn't mean we won't see a new high on Monday, but that new high may just be wave (b) of [iv]. If so, then wave (c) of a flat, expanded flat, or triangle should follow. In the expanded flat scenario, the downside target is in the 1310 to 1320 zone. If a flat is underway, then we may only see a retest of this week's low. If it's a triangle, then more sideways trading is likely. In all three cases, a 5th wave with a target of around 1450 should follow.
A sharp 3 day selloff would probably be a good time to exit any open short positions, particularly if the support zone is hit. At that point the long side will be in play again. While it is possible that a 5th wave is already underway, I am skeptical due to the negative divergences, and the fact that the summation index has continued to decline, and the McClellan Oscillator is still below zero.