Sunday, February 10, 2013
The primary count that has been used for some time remains the favored option. The count works best on the large scale since March 2009 and there is good evidence to support it in the short term. The maximum price level for this option is 1550.
The count calls for a triple zigzag wave  since the November low with the last 2 zigzags beginning at 12/31/12. The first (from the November low to the December high) looks like a clear correction and is excellent as a zigzag.
If there is an incomplete impulse higher since 12/31/12 as the alternate count suggests, there are several problems. Wave 3 is shorter than wave 1 and the short term wave count suggests that wave 4 will be out of proportion with wave 2. The alternate label for 4 has been placed at the Monday low (this gives proportionality between 2 and 4), but the reason why this appears unlikely is discussed below.
The action higher since the Monday low is corrective looking. When the Market opened Friday, it looked like the a 3rd wave might be underway due to the strength of the advance. But the wide sideways action after the morning high following a minimal new high gave the impression that this was not a 3rd wave; an impulse or zigzag since Thursday looked complete so the idea for an impulse higher since the Monday low was on shaky ground. Keep in mind that since the alternate wave (3) is shorter than (5), (5) should be short. The alternate (5) calls for a subdivided wave with its core or "3rd of a 3rd" still not yet seen. Also 2 of (5) is very odd.
Prices should continue higher Monday morning to complete a well-formed double zigzag higher since the Monday low. This should be wave B following the clear single zigzag A lower. By the time a downward flat or triangle since 2/1 completes, it should be best proportioned with primary wave (X) rather than alternate wave (2). This correction can break under 1495 or 1490 making the alternate option weak.
Posted by Nate at 12:07 PM