Sunday, 8/25/13 update

The question right now is whether the Aug 5 top did indeed mark the transition to a trend change to bearish for the intermediate term.  There appear to be 5 waves down from the Aug 5 top in the ES complete at the 1631.50 low after regular hours on Aug 21.  If so, then the current short term rally from that low is significant.  A continuation of the rally to new highs obviates the question, a failure and downturn below that 1631.50 low pretty much confirms a change in trend.
From a fundamental standpoint, the current talk of winding down the Fed liquidity machine is ominous.  Yes, corporations have recovered from the recession malaise to some extent, so there is that basis of support for equity prices.  But there is no doubt that the Fed money machine has pumped up financial markets to a large extent, and if that machine is turned off - uh oh.  So the background news certainly supports the bear case.

If the rally from the Aug 21 low is in fact corrective and destined to fail, then a likely target is ES 1677.00 where Micro Wave a (black letters) = Micro Wave b and where Minute W2 or b (green letters) will = .618 x Minute W1 or a.

There are several alternative IT counts here that are possible and that I am tracking, but they all have much lower probability IMO.  When charting EW I take an Occam's Razor ("the simplest answer is often correct") approach, to wit the most obvious EW count is probably the correct one.  So I'll address these alternates if they appear to increase in probability, meanwhile the above count is the most obvious.

Sunday, 8/18/13 update

Looks very much like the Aug 5 top in the ES/SPX was in fact a significant high that marked the onset of an intermediate term change in trend to bearish.  Current count looks like this:

As is common however there is a possible alternate count:

In this alternate there are only 3 waves complete from the Jun 24 low (Minute Waves 1 - 3) and Minute W4 of the sequence is still in progress.  The Minute W4 action since the Minute W3 top has been an irregular flat which is close to the completion of it's 3rd and final leg, Micro Wave "c".  Following the low of that Micro Wave "c" the ES would rally one more time into a Minute W5 top.  This count, although possible, has a low probability for several reasons, the chief of those being that the Minute W4 in this case is severely out of proportion with Minute Waves 1 thru 3 of the move.  The alternate is eliminated with a print below the Minute W1 top at 1620.50.

Sunday, 8/11/13 update

Very choppy market in the last few weeks in the ES/SPX with no real progress in either direction.  But, on balance, the evidence is that a significant top was made at ES 1705 last Monday.  All the indicators of an imminent top mentioned in the post of July 27 are still in place.  On top of those factors the EW now appears to have reached a conclusion of the run up from Jun 24 with the 1705.00 print of Aug 5, and the pattern since that time has only served to confirm that the top is in.  As can be seen, the pattern from the Aug 5 high into the Aug 7 low of ES 1680.50 is clearly a 5 wave impulse, and the pattern from that low into Friday's close is a choppy, overlapping corrective looking sequence.

So the preferred count at this point has 5 waves complete off the Jun 24 low into the Aug 5 high, with wave 1 of the move off that high bottoming on Aug 7 and a corrective bounce working it's way out since that low.

 Preferred count

  
There are a couple of ST alternates that should be considered:

Alternate #1

The 1st alternate is that the Minute W4 action since the Minute W3 top has been a running flat which only just terminated at the 1680.50 low of Aug 7.  In this scenario Minute W5 is in it's very earliest stages.  This alternate has to be counted as very low probability for the reason that running flats typically occur early in a trend rather than towards it's conclusion.  This is because the impetus for that type of correction is that the underlying trend is so strong that it skews the correction in the direction of that underlying trend.  If anything the bullish action of recent weeks can be characterized as weak, which mitigates against the possibility of a running flat to occur. 

Alternate #2

The 2nd alternate is that the short rally from the 1677.25 low of Jul 30 (end of the W4 triangle) into the 1705 top of Aug 5 is only the 1st leg of Minute W5, so the action since that top is wave 2 of the sequence with waves 3 through 5 yet to occur.  This also has a low probability IMO, but actually is more feasible than the running flat alternate.

So if a top is not in fact in place, it shouldn't be far away.

Saturday, 8/3/13 update

On the road again so just a couple of ES charts

Saturday, 7/27/13 update

McClellan Oscillator is currently showing a divergence that looks quite similar to the pattern exhibited in mid-May:

The Vindicator Buy/Sell index (a proprietary indicator that measures buying & selling pressure) shows a steady decline of buying pressure (green line) after an initial 1st wave burst off the June 24th low:

Sentiment as measured by the VIX is showing high levels of complacency:

And the current EW count shows the ES/SPX in the 5th of a 5th wave:

All of which is to say that the odds highly favor an intermediate term top near at hand.

AND if the long term bear alternate count is the correct one, then it will be a very significant long term top:

Saturday, 7/20/13 update

The bull continues to run, no surprise given all the bull---- being pumped out by the Fed.  Although this bull is beginning to look a little winded.  I would be too if I had chased down and stomped as many bears as he has.  Word is that Prechter's crew has even turned short term bullish, certainly an ominous sign - when the last bear capitulates the top can't be far away (full disclosure - I used to be a big fan of EWI in the late '80's, lost A LOT of money when I let their perma-bear attitudes influence my thinking - yes, they have been perma-bears going that far back).

If the below Elliott count is accurate, then we should see some choppiness and volatility over the coming week or two.  That should set up some technical divergences and lead into a fairly significant intermediate term (and possibly long term) top.

Saturday, 7/13/13 update

This is beginning to look like a blow-off top in equities.  The steepness of the ascent since the Jun 24 low is notable, and it's a fair guess that if the ES/SPX continues to steam upwards at this rate through the all time high at ES 1685.75 (only 16 points away as of Friday close) then it will possibly hit some major stop losses on short positions and actually accelerate.  Current long term bull and bear alternates look like this:

Bull alternate

Bear alternate

In depth discussion of these alternates can be found in the chart section of this site here.

From a short term perspective, the rally from the Jun 24 low into the Jul 1 top looks like the 1st wave of the move. Wave 2 bottomed (after an odd looking correction) at 1594.00 on Jul 3rd and wave 3 is currently in progress.  Best guess on the internal count for wave 3 is shown, which will require two wave 4 & 5 sequences yet to complete.  However, it should be mentioned that there is a way to count wave 3 as much closer to completion (not shown).  So the status of wave 3 is an open question.  Either way, it appears that the bull move off the Jun 24 low has a distance yet to travel before a significant top can be expected. 

One other note: the Al's travel indicator is about to go off.  I'm scheduled for a 5 day business trip starting Sunday, Jul 21 through Thur, Jul 25.  Because I'll be on the road in airplanes and driving etc I won't be able to monitor the market very closely at all.  When I travel it seems that the ES inevitably hits a critical juncture and I miss a major turn (last trip I was on was Apr 16 - 19).  So put your astrology charts aside, more than likely the current bull move will top somewhere in the Jul 21 to Jul 25 time frame based on my travel plans.  And if that happens, I'm going to once again ask WHO'S IN CHARGE OF THIS S....!!