Today's action has brought that assumption into serious question. The underlying technicals, although still not overly impressive, have definitely improved. But probably of more importance is that the bear flag or diagonal pattern apparent last week has dissolved. Instead, the action off the recent lows is beginning to look like a series of nested waves 1 & 2.
It's been mentioned in the last couple of weeks that there recently have been multiple EW alternates possible. One which I've been watching is that Intermediate W4 (purple numbers in the above chart) bottomed at the low of Aug 28. This would seem to have a low probability given it's shallowness and short duration compared to Intermediate W2. Inter W2 occurred in the spring of 2012 and dropped 170 points over a 2 1/2 month span. But it's not impossible. Inter W2 was a flat, and in this alternate Inter W4 is a zig-zag, so from an EW standpoint the rules have been satisfied.
The hourly chart of this alternate looks like this:
Of course the bearish viewpoint presented in Saturday's update is still in play, but the odds of it being correct are diminishing rapidly.
One final note: Inter W4 in the above count could develop into a triangle and still adhere to EW guidelines. That would chew up more time and at least provide some similarity to Inter W2 from that standpoint. But it would be a pain in the neck from a trading standpoint.
