12/19/11

Let's eschew the actual degrees of the subwaves following the 1267.06 high.  We can clearly see that there are seven waves down of significance.

If this is the first significant wave down of Minor 3 (either Minuette (i) of [i] of 3, or Minute [i] itself), then we would expect there to still be an eighth and ninth wave of the move.  Given that the most dominant motion of the move was the downswell on 13-14 December, it would not be unreasonable to consider that the 3rd of 3rd and therefore that what I have labeled as Submins iii, iv, v, vi, and vii are really Micro [1], [2], [3], [4], and [5] of iii.

The more bullish (at least for now) possibility, is that we are in, or have just finished up, Minuette (b) of [y] of 2 (or, if you prefer, Minute [b] of Y of (2)).  If this is the case, we have room for a marginal new low, provided we do not go above around 1215 before making it.  If we go above 1215, one becomes hard-pressed not to consider any new low to be of significance, which would make it wave "ix" of the down move severely weakening the bullish case (unless another mild 4-5-type move comes into play, in which case you could consider it an 11-wave correction, but...)

One of the things favoring the bullish possibility is the SPX having made a lower low on higher hourly and 30-minute RSI and MACD.  It is also just about touching the 100-day SMA, which has acted as support in several instances recently (though, oddly, not as resistance when touched from below) - March, mid-July, and early November.  An A=C bounce from today's lows would get us into the 1310s, which is rather close to the major resistance trendline from 1370-1356 (which is now in the lower 1320s). 

On the other hand, the fractal similarity between the move from 1292 and the month of July doesn't bode well for the markets... what if Santa really is just your parents after all?