Sunday, 10/14/12 update

The selling in the ES/SPX since the short term top of Oct 5 has been an almost picture perfect 5 wave impulse that appears to be nearing its conclusion.

There are divergences evident on a number of short term indicators which help buttress the argument
for a short term low.  In addition prices have dropped into an area that has served as resistance/support over the last six months.

The preferred count at this juncture is for the current sell off to be a "c" wave in a flat correction.  If accurate then a low in the very near future could serve as the launch point for a decent sized rally.  But even if not accurate a completed down impulse should lead to a retrace of the move.  So the ES could provide a long entry opportunity in the very near future with a nice risk/reward profile - long near the bottom of the evident support/resistance area with a stop not too far below, potential upside in the upper 1400's (or higher).

Current preferred counts look as follows:

OR