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Sunday, May 5, 2013

Sunday, 5/5/13 update

This site has long favored the view that the equity bull market since the Mar '09 low is in fact an "X" wave between long term bear market sequences.  However, with the strength in equities of recent, and most particularly with the strong penetration of the 1600 level by the ES/SPX this last week, that view has diminished considerably in probability.  Back in 2009 and 2010 the chart pattern in the ES/SPX just did not look impulsive on the long term, which helped fortify the argument for an "X" wave in progress.  But now it's beginning to gain a very impulsive look.  So, with reluctance, the long term bull alternate has to be elevated to preferred status with the "X" wave bear a distant second possibility.

In addition, in the EW count on the bull alternate the series is actually only a little past the mid-point of the series developing from the Mar '09 lows, at least in EW terms.  Which is to say it's in a Minute W5 of Minor W3 of Intermediate W3 of Major W3 of Primary W3 of Cycle W1.  This would be the mid-point from an EW count standpoint, not necessarily the mid-point in terms of price or time, but it does imply a significant amount yet to be accomplished before a significant long term top. 

Long term preferred bull alternate

The ES/SPX should however be closing in on an intermediate term top.  The current Minor W3 dates back to the lows of last mid-November and is thus getting pretty long in the tooth.  Price is also getting very near to the assumed upper trendline of the channel that currently defines Primary Wave III.  And finally, if correct, the EW count on Minor W3 looks to have Minute waves 1 to 4 complete with Minute W5 in progress.

Minor W3 - internal EW count

The above count needs to be taken with a grain of salt - Minor W3 has extended several times to this point as it has continued to truck on upwards, so it's certainly possible for it to continue doing just that. 
But if the above Minor W3 count is accurate, then it also is the case that the current Minute W5 is just past it's mid-point and thus an intermediate term top is quite likely before the end of the month. Current likely target area for that top is in the ES 1645 - 1650 area.

Minute W5


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