Monday, 5/30/16 update

The rally over the last eight trading days has pretty much blown up the two alternate counts for the ES that were posted on the last update.  It's very clearly a 5 wave impulse that looks likely to exceed the 2105.25 high of Apr 20 in the next day or so.  Also, barring the development of an extended wave, the move is close to done, so a correction to it is in the wind:

So where are we at?  The first possibility is that the low of May 19 was the terminus of the Major Wave 2 correction to the Major Wave 1 rally of mid-Feb through mid-Apr.  That would put the ES in Major Wave 3.  We should thus expect pretty strong bull market action over the coming months:

The problem with this view is that in recent years the summer months have been bear markets ("Sell in May and go away" is the adage).  This is why I favored the two alternates presented in the last update.  But seasonal tendencies are just that: tendencies.  Which means they may not hold true in any given year.

An alternate possibility is that the rally from the mid-Feb low was not complete at the mid-Apr high and that the sequence since then is the 4th and 5th wave of that rally:

This fits the seasonality expectation.  The problem with it is that the internal count for Inter W3 of the rally is not very clean. 

On balance I'd give the 1st alternate the edge between the above two, but only a very slight edge.

There is a 3rd intermediate term possibility.  That possibility is that Primary Wave IV was not complete at the mid-Feb lows and that the entire sequence since the lows of last August is a flat style correction to the bear that started last summer.  If so, it is very close to complete.  This would portend a steep bear market in the very near future.  This is an alternate possibility suggested by Pretzel, one of the best EW analysts out there.  So it has to be respected.

Saturday, 5/21/16 update

ES continues to be a muddy mess.  Couple of short term possibilities:

OR

Sunday, 5/8/16 update

Thursday evening I posted an ES count that proposed an ending diagonal "c" wave in progress.  That idea was promptly blown up on Friday morning.  So it goes.

But it does look like an interim low was established Friday morning.  As usual there are some alternate counts here, but my preferred short term count has a multiple zig-zag formation bottoming at that low:

This count would dictate a run up to the late Apr high at the very least.

The most likely alternate here is that we've seen a series of nested waves 1 & 2 since the Apr highs:

If this count is the correct one then we should see an almost immediate acceleration into a 3rd of a 3rd of a 3rd wave sell off, possibly at tonight's open.

I prefer the 1st alternate above because of the behavior of my Buy/Sell Oscillator.  This is an index which attempts to measure buying and selling pressure in the market:

As a timing tool it tends to lag the market, so more often than not it serves as a confirmation of a trend.  But at times it tends to vacillate wildly, and when that occurs it often signals a change in the prevailing trend.  As can be seen, that's exactly what it's been doing in the last week, so this may be telling us that the ES is transitioning from a downtrend to an uptrend.  I publish this thought with some trepidation given how quickly my post on Thursday was destroyed.  But there it is.

Thursday, 5/5/16 update

I've been staring at the ES chart from time to time over the last two weeks, trying to make sense of the pattern in EW terms.  Made only one trade in that period and got my a-- handed to me.  But this afternoon it came into focus:

Of course there are other possibilities here, chief of which is that we've seen a whole bunch of nested waves 1 & 2.   If that's the case, the ES should fall off the edge of a cliff very soon.  If the above possibility is in play, we should bottom very soon and rally sharply.  So we're at an inflection point.