"Reviewing the blogs, I see a lot of calls for 980ish and 930-950ish. I am in sync with Tony calling for a test of 869 in wave 1 of C/3.
First, the failed H&S pattern at 869 and all the gyrations above and below 875 make that area the most critical to any long-term bull argument, and, historically, the tops at 944 and 956 are likeliest to be broken and broken by more than 1% even if a subsequent bull run ensues.
Second, if you believe SPX is not in a new bull market and if you believe SPX will break the 667 low, a test of 850-900 is more likely than 930-980, because a common multiple for an impulsive wave is 2x-3x wave 1. A 200-250 pt drop to 850-900 would equate to a total move of 2x-3x that down to 350-700 whereas a 120-170 pt drop to 930-980 would only equate to 590-860. Yes, a drop to 930 puts SPX on the edge of being able to break the 667 low but only on the edge nonetheless. Case in points...
a. SPX wave 1 in 2007 was 1576-->1256=320pts while the entire bear drop was 1576-667=909 and 909/320=2.8x wave 1.
b. SPX wave 1 of 1 from Oct 11, 2007 was 1576-->1406=170 and (1576-1256)/170=1.9x.
c. SPX wave 1 of 3 from May 2008 was 1440-->1200=240 and (1440-741)/240=2.9x
d. SPX wave 1 of 5 from January 2009 was 944-->804=140 and (944-667)/140=2.0x
e. SPX wave 1 of A from the Sep 1929 top was 381-->325=56 and (381-199)/56=3.3x
f. SPX wave 1 from March 2003 was 789-->1015=226 while the entire bull run was 789-->1576=787 and 787/226=3.5x (the difference in this one is that it is a bull market impulse and looking at the 2002 to 2007 bull run or even Tony's historical chart from 1929, you can see bull market impulses typically see a much larger multiple of wave 1 than 2x-3x)
So, 2x-3x is a good estimate for bear markets with outliers of course and 850-900 for wave 1 has a lot better chance of breaking 667 than 930-980 for wave 1.
Third, if you take a step further back and try to calculate a C/3 wave drop from 1101 based on the A/1 wave from 1576, you also arrive at a sub-600 bear market bottom which makes a deeper drop to 850-900 a lot more likely than 930-980. Wave A*1.5x to 2x is a more common target for an ABC versus 2x-3x for a 12345. So, let's assume the bear market drop from 2007 will be an ABC like Tony says rather than 5 waves ending an irregular flat like others say. Then, 1576-->667=909, so a typical ABC projection would be 0-213, not too far below what I think is a conservative projection of 300-450. Case in points...
a. Dow wave A in 1929 was 381-->217=164 pts while the total move was 381-->41=340 pts and 340/164=2.1x wave A
b. SPX wave A of W in 2000 was 1553-->1339=214 while the 3-wave W was 1553-->1081=472 and 472/214=2.2x
c. SPX wave A of Y in 2002 was 1316-->944=372 while the 3-wave Y was 1316-->769=547 and 547/372=1.5x
d. SPX wave A of W in July 1998 was 1191-->1054=137 while the 3-wave W was 1191-->940=251 and 251/137=1.8X
e. SPX wave A of Y in Sep 1998 was 1066-->965=101 while the 3-wave Y was 1066-->923=143 and 143/101=1.4x
f. SPX wave A in 1997 was 983-->932=51 while the ABC was 983-->855=128 and 128/51=2.5x
g. The main 1996 correction had a very long C wave and the historical late 1987 ABC was 4.3x wave A, but in Jan 1994 wave A was 483-->458=25 while the ABC was 483-->436=47 and 47/25=1.9x
So, ABCs are much less predictable given the possibility of overlaps, flats, triangles etc, but [ABC length]=[A length]*(1.5 to 2) seemingly covers most cases with lots of outliers. The minimum target for SPX in that scenario is 213.
Fourth, what about other common means of targeting the bear market bottom? How about a symmetrical zigzag? 1101-909=182. Even lower than 213 or my 300-450 "conservative" projection. What about C=A*.62? That projects 909*.62=564 and 1101-564=537 so there's hope SPX will only get cut in half from today. What about the wave 4 of previous degree, a common retrace area? SPX 63 in 1975 according to Tony. Ouch. What about the wave 4s since 1975? That's 1987 and 2002/2003 according to Tony. SPX was at 225 and 769 in those cases. We already broke 769 and if we're going even lower, is 225 next? What about other percentage declines in super cycle bear markets? Nasdaq 2000-2002 was 78%. Dow 1929-1932 was 89%. A 78-89% drop for SPX would be 173-347. Yikes!
All of the above technical reasons on top of the HUGE credit/debt/govt/population/spending/energy/tech/war/business cycles that are bottoming over the next few years tell me SPX sub-667 is highly highly likely, sub-500 is very probable, sub-400 is reasonable, sub-300 is possible and sub-200 is not out of the question. I'm using 300-450 for my target, because it would be a conservative smaller percentage than Nasdaq 2000 or Dow 1929 considering unprecedented monetary inflation and since 300-450 covers the top portion of the 1987 collapse and most of the grinding higher from 1988-1995 including the long 1994 consolidation before things accelerated. The world will not end if SPX falls to 300-450 or lower, but there will certainly be strife and turmoil. Unfortunately, that's what I see. And, since sub-667 is so likely, it makes sense that wave 1 from 1101 (assuming that was the top) would fall to 850-900 (maybe even a panic to 800) allowing a 2x-3x multiple down to 300-450. Here are my "conservative in my eyes" estimates for the rest of the bear market using the above analysis as a guide.
October 2009 SPX 1101 top
December 2009 SPX 850 w1 of C
Feb/Mar 2010 SPX 1000 w2 of C
Sep-Nov 2010 SPX 500 w3 of C
January 2011 SPX 700 w4 of C
October 11th 2011 SPX 450 w5 of C
Another A-B or 1-2 into spring/summer 2012 before we get the largest rally in years maybe in time for the 2012 elections or maybe we get Prechter's 4-5 down (ending an irregular flat versus Tony's ABC expectation from SPX 1576) into the 2012 elections."
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