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Sunday, June 2, 2013

Sunday, 6/2/13 update

Current preferred count has the ES/SPX completing a Minor W3 at the May 22nd highs with Minor W4 currently in progress.

Minor W2 was a flat, so by the EW rule of alternation Minor W4 needs to be either a zig-zag or triangle style formation.  There are several ways to view the progress of Minor W4 since the May 22 top.  The most obvious possibility is as shown in the chart above, with a series of 1st & 2nd waves of ever lower degree leading into a 3rd of a 3rd power drop such as showed up on Friday.  The whole structure, when complete, will form Minute Wave "a" of either a zig-zag or triangle Minor W4 and will be followed by a Minute Wave "b" rally sequence.

The other possibility is that the pattern from the low of May 23rd through the intraday high of Friday is a triangle formation that represents wave "b" of a zig-zag.  That zig-zag will eventually become the 1st leg of a double or triple zig-zag formation for Minor W4.  The triangle would thus be Micro Wave "b" with Micro Wave "c" of Minute Wave "w" now in progress.  The completion of Minute "w" will be followed by a Minute Wave "x" counter trend rally and then at least one more zig-zag type sell off.
A final possibility (not charted) is that the current sell off from the May 22nd top is the 1st leg in a developing triangle.  In that eventuality the low achieved by the current sequence would be the low point for Minor W4, after which Minor W4 will track sideways in a trading range fashion for a while before concluding. 

The long term alternate bear count is below (daily bars).  At this point, the short term possibilities are pretty much the same as in the preferred count.

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