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.
