Wednesday 7/28/10 wrap up

The action yesterday and today is beginning to cut deeper and last longer than what could be expected of the anticipated 4th wave, although it is somewhat choppy and (not yet) clearly impulsive.  So we're back to the Door #1/ Door #2 scenario.
Door #1 is the preferred count.  It assumes a major intermediate term low at ES 1002.75 on Jul 6.  It looks like this on the daily ES chart:

DOOR #1 - ES DAILY

The problem with the possible Wave 4 can be seen on the ES hourly chart:

DOOR #1 - ES HOURLY

Door #2 is an alternate count which assumes one more down trend leg is necessary before we see an intermediate term low.

DOOR #2 - ES DAILY

On the hourly chart the rally from Jul 20 is counted as a diagonal C wave which concluded at yesterday's highs.  That point also marks the end of a B wave corrective rally from Jul 6 and starts a larger degree C wave sell off that should carry into the ES 990 area or lower.

DOOR #2 - ES HOURLY

Still holding long ES via the trendline/oscillator system.  The caution light came on today when the oscillator crossed below the 80 level.  If there is an hourly close below the lower trendline we will have a sell signal.  That trendline is currently (4:30 PM CST) at ES 1091 and will be at ES 1094.50 at 7 AM CST tomorrow.  Why do I mention ES 1094.50?  Because that is the high of wave 1 (black) in the preferred count and if the ES trades below that the preferred count is invalidated and will have to be either revised or discarded.

The Buy line in the Buy/Sell Vindicator has declined since yesterday's top but it did not diverge coming into that top, rather it confirmed it.  The V Stoch is waffling around in mid range and not really giving us a lot of info, except that it was more towards the oversold range at end of day.  So it's possible the ES may regain it's footing soon and resume it's rally.  Stay tuned, answers and direction should be apparent tomorrow.