Posts
From the early September low, the wave count shows three waves up have been completed with wave four in progress, to be followed by wave five next week. The wave three top was just under 1075 which is within the 1069-1075 resistance area given Wednesday. On the s&p500, the price target for wave five is the 1088-1095 resistance area. On the Dow Industrials, this corresponds with the 10009-10074 range. The 50% retracement of the entire decline from the 2007 high is 1121 plus or minus 30 points(1091– 1251) on the s&p500 and 10334 plus or minus 265 points(10069-10599) on the Dow. The price overlaps between the two price zones are 1091-1095 on the s&p and 10069-10074 on the Dow which are the most likely price targets for the wave five top. The current cycle reversal zone of 9/18 to 9/22 ends Tuesday and is the most likely time for the top. If that is the correct timing and outlook, the Dow would need to rally 250 points by Wednesday from the end of wave four(probably on Monday).
It will be possible to count five waves up from the March low to next weeks probable top. If so, it would probably be either wave (1) of primary wave one, or wave (a) of a corrective zigzag from the March low. Either count would be followed by a substantial correction, equal to or larger than the mid June to early July decline. It is also possible it is in wave 3 of (3) of a larger primary wave one, however the first two counts appear more likely. This bullish third count would bring a milder correction off the wave five top or even a continued move higher without a correction.
Chart: S&P500 one month chart, click to enlarge
