Thursday, 7/5/12 update

Looks like the ES entered correction mode today with a top right at the 1375 level that was anticipated.  In the preferred bull alternate this correction is Minute W2 of Minor W3.  An initial target is at ES 1347.25 which is a .382 retrace of Minute W1 and also the area of Micro W4 of Minute W1 - corrections often bottom in the area of the prior 4th wave of one less degree.

If the sell off gets more serious a level of concern for the bull alternate is at ES 1317, which is the 80% retrace of Minute W1.  A drop below that level would put the bull case in jeopary.

There's a fair chance that this correction could be quite quick.  The RUT (Russell 2000) is a broader based index than the ES/SPX and often leads the ES/SPX.  It has been on a real tear since the Jun 4 low and has actually been significantly stronger than the SPX.  That relative strength is signalling more up market ahead.  Below chart is a comparison of the two, with the RUT in black bars and the SPX in purple.  The indicator below the chart is a simple ratio of RUT/SPX.