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Sunday, April 13, 2014

Sunday, 4/13/14 update

Alternate #1

Alternate #2

From the Dec 31 Major W3 high the ES formed a three wave structure into a low of 1732.00 on Feb 5, followed by an impulse into an ATH at 1887.50 on Mar 7.  This was followed by a triangle structure which terminated on Mar 28 and then another impulse into a further ATH of 1892.50 on Apr 4.  The action since then has generated some downward impulses but to this point has only formed three waves.

There are two ways to view this action since the Major W3 top.  Alternate #1 has the ES forming a large irregular flat since that time with Intermediate Wave A of that structure bottoming at the 1732.00 low of Feb 5, Intermediate Wave B topping at the Apr 4 ATH, and Intermediate Wave C currently in progress.  This alternate is attractive from a couple of standpoints.  First, it would portend a low for Major W4 that approaches the lower channel trendline of Primary Wave III, an event which hasn't occurred since the bottom of Major W2 and one which is to be expected to make the structure look proportional.  Second, it accounts for the triangle that was formed in March, which is counted as Minor Wave b of Intermediate Wave B.

Alternate #2 has Major W4 concluding at the Feb 5 low.  The three wave structure from Dec 31 into that Feb 5 low fits all the requirements for a flat, and thus fulfills the EW rule of alternation with respect to Major W2, which was a double zig-zag.  However, it is relatively shallow as compared to Major W2.  From that low the ES is tracing out an ending diagonal Major W5,  with Intermediate Wave 1 topping at the Apr 4 high of 1892.50 and Intermediate W2 in progress and either done or close to done.  Intermediate W1 is an a-b-c structure as required in an ending diagonal, with the March triangle being Minor Wave b of that structure.

There is a 3rd possibility which has Intermediate W3 extending farther than the above alternates and topping at the high of 1845.75 on Jan 15.  Intermediate Waves 4 & 5 then follow into the 1887.50 high of Mar 7 marking the top for Major W3.  The March triangle then becomes Major W4 with a short and quick Major W5 into the Apr 4 ATH of 1892.50.  That high would thus be the point of a significant trend change from the bull market of Primary Wave III to the bear market of Primary Wave IV.  The problem with this alternate is the compressed natures of Intermediate waves 4 & 5 as well as Major Waves 4 & 5 as compared to earlier waves in the series.

Alternate #3

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