Update

The wave C of primary wave 4 count is still the preferred count however we are not out of the woods until mid to late January when multiple long term cycles are due for completion which are usually bearish. The main question is whether wave C bottomed today or will it bottom sometime in January(if the bottom was today, that is just two trading days after my opinion given in Wednesdays post that the bottom may occur last week). The longer time frame would allow time for wave C to expand to a double zigzag instead of a standard zigzag.

An alternate count with nearly equal odds would allow for the decline from the October/2018 high to present to be wave A of a larger sideways type correction within primary wave 4. In this count, primary wave 4 would extend up to several months past January/2019 but subsequent lows may be above the December/January low. This count would agree more with the cycles which are more mixed to negative in 2019 (especially in January) compared to 2018 which had bullish cycles (also 2019 is the 3rd year of the election cycle which is the strongest as stated last week with an average gain of 12.8%). There is also a long term bullish cycle that tops in 2020.

An 2nd alternate long term count has been identified that labels the October high as the top of primary wave 3. That count would allow the current correction to be a zigzag style correction - a standard zigzag or a double zigzag. This is not a preferred count as wave 4's tend to be sideways or complex type corrections whereas wave 2's tend to be simple or zigzag type corrections.

The bearish cycle wave 1 count with the top at the October/2018 high given as the alternate count last week would also be followed by a probable zigzag style cycle wave 2 - with that, there could be a large intervening B wave that could last several months and create a large up move that could move up toward the old highs. This still looks like the less likely scenario but becomes more likely if there are lower prices after January/2019 as stated last week or if indexes continue to drop hard as they did last week.

Dow monthly chart. Preferred bullish count. Click to enlarge.

Alternate bullish count. Click to enlarge.

Alternate bearish count. Click to enlarge.

Primary Wave 4 expansion

Primary Wave 4 of Cycle Wave 1 looks to have expanded and may soon be complete. This was the alternate possibility given at the April update. The wave counts have met the minimum requirements. If not it may be complete by mid January/2019 although this week looks more likely due to the bearish sentiment. Primary Wave 5 would then be upcoming which would take the market above the September high and possibly a lot higher. The 3rd year of the election cycle is the strongest with an average gain of 17%. That would agree with a strong Primary Wave 5 outlook.

A strong weekly close below the April/2018 low may cancel that count and may indicate that Primary Wave 5 ended at the October/2018 top. That would portend that Cycle Wave 2 is in progress which would be the largest correction since the 2007-2009 period.

The bearish Cycle Wave 2 scenario would apply mainly with a weekly close below the April/2018 low that occurs after mid to late January/2019. A close below the April low until then could still be part of Primary Wave 4.

Dow monthly chart. Click to enlarge.

Primary Wave 4 to be Completed Today?

   
Primary wave 4 may end today. It appears to have formed an ABC zigzag style combination as shown on the chart. The C wave looks to be forming a triangle. That count would only require an E wave decline to complete the triangle. The E wave would probably complete at todays low. 

A completion of primary wave 4 would portend a move upward to first test the February high and then the January high. A move above the January high would probably confirm that primary wave 4 is complete.

An alternative possibility is that the current decline is the C wave of a larger triangle or combination. I think this possibility would have lower odds based on other technical indicators and sentiment.

Click to enlarge

A 2nd Elliott Wave Count Possibility

This long term wave count is an alternative to the long term count given in the last update.
In this count, primary wave 3 topped out and primary wave 4 of cycle wave 1 has been in progress since the January 2018 high. 

Primary wave 4 may be forming a triangle formation on the daily chart that may be completing soon if not yesterday. 

I give the odds for this count at about 55% as fundamental factors and cycles seem to point to the more bearish count at this time.

Long Term Update

Primary wave 3 of cycle wave 1 in progress
Recent February low may have been price low of wave 2 of primary wave 3