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Saturday, October 15, 2016

Saturday, 10/15/16 update

The triangle "X" wave posited in last weekend's update played out pretty much as anticipated.  That wave terminated on Monday and a 5 wave impulse down ensued leading to a low on Thursday morning.  The bounce since that low put in three legs into a high Friday morning, adequate for a correction, so it may be that another leg down has commenced.  If all this is correct, then since the Monday triangle terminus we've seen either waves A & B of zig-zag "Y" or we've seen waves 1 & 2 of wave A of that zig-zag:

Backing out to a longer view the two most likely possibilities are that Primary W III of the bull market since the '09 lows topped this summer with Primary W IV in progress (1st chart below) or the ES/SPX is working out Major W5 of Primary W III (2nd chart below).  Couple of things to note: on the 1st alternate Primary W II was a simple zig-zag, so Primary W IV needs to be a flat, triangle or some type of complex corrective sequence as per the EW rule of alternation. On the 2nd alternate the count is invalidated if the market continues selling off and drops below the assumed start of Minor W1 at ES 1981.50.

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