After some additional consideration to yesterday's regular update, a new count has been created to better describe action since March 2011. While the June-July rally retraced more than 78.6% of the May-June decline and (5) of [3] was truncated with little correction following, it appears more unlikely that the market will draw out an out-of-proportion wave c; c is already more than 61.8% of a. Proportionality and simplicity are keys to a good wave count.
Counts for complete and incomplete rallies since March 2009 have enough broken guidelines to make both option look poor. To add confusion, there are good arguments to support bearish and bullish views. For example there is no negative divergence in long-term indicators such as the advance-decline line and a number of oscillators. This is unusual for a topping market. On the bearish angle, the market showed considerable weakness the past two weeks in a long-term complacent marketplace that may never have been capable of another recovery high.
Expectations remain unchanged in the short term. Following an extended 5th wave, a sharp rebound is still expected that will likely overlap the June low.
In the long term, the market is still likely completing a sideways wave [IV] correction of grand supercycle degree explained here several months ago.
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