The case for the stock market to make a marginal new high is hanging by the threads, but it still can't be ruled out. Even so, betting on a rally for any reason other than exiting every share of every stock you don't want to see fall 50%, is a very dangerous venture. An interesting way to look at the market's actions since the summer highs is to consider the Wilshire 5000 Index, which represents nearly the entire U.S. stock market. It has given up $3 trillion in value. That is about 65% of the entire value of all the quantitative easing that the Federal Reserve performed.

Let's look at where the market stands and where it might be going. First, the optimistic side. This first chart is the weekly bar chart of the S&P 500I:GSPC dating back to the 2011 low. The way it's labeled, there is at least a chance for one more quick thrust from recent levels around 1880 to a slightly higher high into the high 2100s. The pink oval represents the highest-probability attraction zone if the index can close above 2075 and it doesn't close below 1725. If the S&P 500 closes below 1725, it would all but eliminate the bullish resolution of this crossroad.

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The good news is that a neck-snapping bounce is due to begin this week. The bad news is that it could start only after the index gets closer to 1800 than Friday's close near 1880, and it might only reach 1950 before it rolls over again. If we look at the past five years of history, we can see that the crowd hasn't been able to get the S&P 500 below the lower two-standard-deviation band (golden/olive line currently around 1911) for very long. Before August 2015, it hadn't been below that band (which contains 95% of normality) since the week of the 2011 bottom! Even the summer 2015 decline, while dramatic, only saw two closing weeks under this extreme. This past Friday was the third weekly close in a row below the lower two-standard-deviation band, suggesting at least a bounce is due to relieve this oversold condition. On daily bars, which aren't shown here, Friday also saw prices test the lower three-standard-deviation band (containing 99.7% of normality). Still, that extreme was too exuberant to maintain, and prices bounced higher into the close. Another test, or slight break, of that extreme can't be ruled out for early this week, but it should not be sustainable for more than several hours. The three-standard-deviation band is around 1835 on Monday.

The patterns of decline off the May highs have not been manifesting in classic Elliott Wave impulses, either; they have appeared to be corrective. Even though there have been some hair-raising point declines, the damage is not beyond repair, at least from a pattern perspective. This raises the probability that the entire movement from May until now is a huge sideways consolidation that will remain alive as long as the S&P 500 does not close below 1725. If the index closes below 1815, that will increase the likelihood that the S&P 500 will breach 1725. We've labeled this as the "line in the sand for the bulls."

Another positive is that the stochastics have almost perfectly been echoing what they did in the middle of 2012. Although the selloff from May 2015 has been much more damaging, it has interesting symmetry if 1815 supports this week's decline, as it may be labeled as the corresponding wave (4) to 2012's wave (2) designation. Then, as Elliott Wave and Fibonacci theories instruct, we take the size of wave (1), which is approximately 350 points, and extend it up from either the 1850 level, or at the lower low of this week, and arrive at the pink oval, up in the high 2100s. Voila! Simple, right? Hold on, Gordon Gekko! But there are even more rally-supportive indicators to explore.

Sentiment is outrageously extreme, with surveys of active traders showing 95% bearish conviction. In other words, after the latest eight weeks of selling that has taken this index from 2100 to 1850, 95% of traders are now certain that prices are going lower. This is an extreme that is a historical harbinger of imminent sharp bounces. The public, which is often thought to be at the opposite spectrum of sophisticated traders, just recorded its most bearish position in history. The American Association of Individual Investors survey is now more bearish than it was at the 2009 crash low!

Further, the McClellan Oscillator, which measures relative strength, breadth and momentum (It's sort of a moving average convergence divergence for the advance/decline line), is near the lowest levels it can mathematically reach: the -300 zone. This shows money is leaving the market at an unsustainable rate, which often coincides with at least short-term relief rallies.

Now, the bad news. This second chart shows monthly bars and a bigger-picture perspective. As you can see, these stochastics are nowhere near oversold, like the weekly measures are now becoming. In fact, the entire rise off the 2009 low, not just the 2011 low as in the chart above, can now be considered complete at the August 2015 highs. If all the good aspects of the analysis above win the battle this week, the blue arrows here, too, show what could become a short-covering panic into the high 2100s. Otherwise, the bold, red arrows highlight the path of least resistance, as can be inferred from the horrific records that are being set so far this year.

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The bold blue lines across the higher highs of the first half of 2015 vs. the lower highs in stochastics have triggered what the decision support engine calls a bearish divergence sell signal. They are rare, but ominous, on large-degree trend durations. As also highlighted, the same behavior manifested into the 2000 and 2007 peaks. Each of those instances were followed by 50% crashes in this index, and an even worse crash in the Nasdaq. If that were to occur in the coming few years, the 1065 level would be the minimal expectation. Since this peak possibly concludes an uptrend at least one degree higher than either 2000 or 2007, however, a crash greater than 50% is a reasonable conclusion.

Do you see the red ovals in October 2000 and July 2008? They mark where the S&P 500 stopped trying to hold above its initial low off the bearish divergence sell signal and broke down to new lows, out of the yellow consolidation boxes and into the pink boxes of waterfall selling. This is the exact location where prices are struggling to hold this week: 1830. We've noted this as the "You are here" point. While everyone is expecting the obvious bounce, we should remember that sometimes when something's obvious, it's wrong. In other words, that bounce we discussed above might just need to begin closer to 1800, which would certainly shake the certainty of the obvious-bounce crowd to its knees.

So let's line up the risk/reward ratio of buying here, or even holding for a bounce, vs. what appears to be coming regardless of any test of the high 2100s. At the 50% downside expectation, the reward of 300 points pales in comparison with the risk of a potential 800 points to get this index to 1050, again, where 50% off the all-time highs would align with the past two instances of similar disconnection. Therefore, any near-term bounce that might come from good news on earnings, Iran, crude or anything else, and takes prices into the 2075 +/-125 zone should be used as the ripcord in order to guarantee your portfolio's safe landing, even if you miss the last few minutes of the ride.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.