The overlap of the 1774.50 Nov 7 high this week has ruled out the hyper bullish EW count discussed as a possibility in the last couple of weeks. That leaves two alternates on the table. The 1st (Alternate #1 below) needs a 5th wave to complete Major W3 of the bull market from the Oct 2011 low, which of course would be followed by a Major W4 & W5 before the significant long term top of Primary Wave III. The 2nd (Alternate #2) has that Primary Wave III top in place as of Nov 29 high at ES 1812.50. The Primary Wave III top, whenever it occurs, should lead to some fairly impressive bear activity in the form of Primary Wave IV. Primary Wave II lasted 7 months and dropped roughly 22% (peak to trough) in the ES, and Primary IV should be roughly equivalent.
Alternate #1
Alternate #2
The short term will tell the tale between these alternates. Equities look poised for an oversold bounce off last weeks lows. If that bounce develops into a more sustained rally that results in new all time highs, than the activity of the last two weeks can be viewed as a flat type correction and Alternate #1 is likely in play. If however the market rolls over after a brief and shallow uptick and collapses below last week's lows then the pattern since the Nov 29 ATH can be labeled as a series of nested waves 1 & 2 and Alternate #2 becomes the preferred view.
