Scott,
After rechecking things this evening, i have to confess that the original scenario is not dead, and the new scenario is alive and well also. Under the original scenario, this drop we're in since Monday mornings highs would be considered a wave 4 zig-zag corrective, with wave 5 to follow. As we discussed this a.m., 1262 being taken out was significant, and at the time i felt it may signal wave 4 & 5 had concluded in the downs & ups late last week.
However, after checking the rulebook, this wave 4 on an ending diagonal has quite a bit of room to roam. The only restrictions i found is that it can't break the beginning of the 5 wave move (which is 1222 in this case), and it must obey the zig-zag rule guidelines for its own internal structure. Under those guidelines, wave C is not allowed to travel more than 5 times the length of B. So from Monday's open, where wave 4 began under this scenario, We had the A down into mid morning, and for the rest of the day, retraced up in a wave B corrective. If you calculate the size of B, which was 13.10 points, and multiply times 5, this means we could slide 65.60 points in this wave C of 4 from the late day Monday high of 1289.5, or down to 1223.90, and still remain in the tolerances for the 4th wave. Nice how both rules highlight the low 1220's as critical for this move.
Since this scenario is still intact, I'm going to keep it as the preferred, which puts us in wave C. C is a 5 wave move, and thus far, I have us completing the first 4 waves by the close today. That late day rally was the wave 4 retracement, and it held where it was supposed to, 1269 or so on the futures. Since then, we've started the 5th wave slide. The most likely target area for this 5th wave of C is 1241 or 42, with an absolute minimum of 1255, and a maximum of all the way down to the low 20's.
So any price action in the 60's is in my view a sure-fire sell to capture at least down to 55, and more likely down to the low to mid 40's. These targets are valid for the alternate scenario also, which i won't detail unless we break the tolerances for the primary, or we see price action that puts it in the driver's seat.
Assuming we bottom tomorrow at say, 1242 as a likely number, then the ensuing wave 5 rally could travel no higher than 1289.5, with a minimum of 1280.8. Boy, it would be a turkey shoot for the short set up if that were to occur with that tight range.
Regards,
David |
