8/9/11

I am fairly sure we are in Minute [iv] now and that the hyperextending Minuette (v) has now ended.  At the very least, we have surpassed several previous lows, which means that at the very least the overnight futures bottom was the bottom at several degrees - possibly not Minute, but at least Minuette.  Note that today also breaks out of the parabolic decline the index had entered.

My count is as follows:

Recall that by my count the Minute [i] bottom was at 1295.92.  If 1295.92 is breached before another impulse wave down, this count is invalidated.  There is, technically, no downside invalidation until the SPX equivalent of DJIA 34 (the Great Depression low), which at the DJIA/SPX ratio of ~8-9 is approximately four.  If that breaches, then the 2007 top was Grand Supercycle [V] ending the Submillennial-degree impulse wave, not simply [III] of it, and things are worse than even Prechter is foretelling.

And now it's time to play a game called "Fun with Trendlines."

Notice in particular the black trendline, which starts at Minor 3 of (A) and hits approximately the peaks of the upward corrections within Intermediate (B).  That line crossed today in the 1080-1090 range, which is exactly where the cash-equivalent of the SPX bottomed out in futures overnight - followed by a rally.

I think the trend lines are approximate locations for the terminations of subsequent waves, though of course I may be wrong.  The light blue line could very well be the end of Minute [iv] - indeed it seems to be full speed ahead for it.  This would be followed by Minute [v] down perhaps to the red line - this would mean a truncation, but as Minute [iii] traveled too far too fast a truncation is perfectly reasonable.  The darker blue trendline, then, is a potential retracement for a quick-and-dirty Minor 2.

If Minute [v] doesn't truncate, it probably will test the black line or the (not-shown) trendline running through the bottoms of Minor 4 of (A) and Intermediate (B).  Could the market be trying to set up a head and shoulders on a large scale?