In the bull alternate, the 5 wave impulse off the Jul 25 low @ ES 1302.75 is Minute W1 of Minor Wave "c", with Friday's sell off either Minute W2 or Micro Wave "a" of Minute W2. Either way the ES should be on the verge of a strong and sustained Minute W3 rally, either right away or within a few days.
If there is further selling from this point a critical level is ES 1317 which is an 80% retrace of Minute W1. Any time a market retraces greater than 80% of a prior wave the odds of that retrace exceeding the start point of the prior wave go up significantly. Thus a drop below 1317 is a big red flag for the bulls and would call the bullish count into question.
The bullish alternate has the ES in Intermediate Wave 5 of an expanding diagonal Major Wave C. As a diagonal each of the five Intermediate waves should have three legs, which is why the Minor waves are labeled with an a-b-c count.
The bear alternate has the ES completing Intermediate W2 or Minor Wave "a" of Inter W2 at the 1375.00 top of Jul 5. That top only being Minor Wave "a" of Inter W2 seems unlikely as the 1375 level is already a fairly deep retrace (71.5%) of Intermediate W1. If in fact Inter W2 is complete then there should be a strong downside acceleration into Inter W3 in the very immediate future. Any further rally will bring the 80% retrace level of Inter W1 into view. That level is 1388.25 and is the red flag level for the bearish case.
