Tuesday, 1/3/12 update

Today's rally in the ES has ruled out the triangle alternate from yesterday's post. But don't despair all you bears because there's another possibility along the same lines. It could be that there still is a medium term double or triple zig-zag bear market formation in the works as per yesterday's Alternate #3, but instead of the "X" wave being a triangle it is itself forming a double zig-zag. In that case, the ES can be counted as being in the "C" or last leg of the second zig-zag. If true, a possible termination spot would be at a trend line connecting the highs from the May top (blue line in chart).