The view and count have not changed since the last update on Wednesday 12/22; there should be a wave [v] impulse completing wave that began 12/16/10. This impulse should terminate a larger impulse, wave C of (Z), which will conclude the rally since March 2009 when complete.
The most simple way of labeling the visible 5 wave structure since 12/16 can be viewed above. This is the same labeling that was provided 12/22. A lack of subdivision (an impulse with 5 rather than 9, 13, or more waves) is a typical feature of 5th waves and also works the best with the above rally.
The short term action remains unclear but a complete top is certainly not out of the picture; in fact, it is the best count. Given what is seen at the moment, a completing wave iv of (v) is also possible but there is already wave ii overlap. If this is also incorrect, a wave (v) ending diagonal is the best view. These are both poor alternative options, but following higher prices, new options can quickly develop.
When prices break under 1256, this will be a signal that the rally has completed. A gap lower tomorrow that follows through to the downside can initiate the sell-off.
There is clear momentum loss on all scales but the market is continuing its grind higher. The VIX however reached as low as 15.40 Friday 12/24, a level not seen since April 2010 just before the flash crash. Volatility will pickup soon following a rally that will likely not extend for more than several more days.
Even though the 1228.74 61.8% retracement level was broken to the upside, the view that a correction has been unfolding since March 2009 has not changed. The upward drift over the past few weeks actually makes a zigzag since late August a higher probability. This is due to the greater proportionality between its wave A and C impulses. A view of the larger count can be seen here from an update made several weeks ago.
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