Weekend Update - 7/18/2010

There seems to be 2 possible counts currently in play. I am still a fan of the primary count, since Friday ended up reversing down from the 1100 pivot. As long as we keep dropping from here, the primary count is still in play.

Currently, the primary count has us starting Minute wave [iii] of Minor wave 3 of Intermediate wave (1). This should be a very bearish wave. Much more powerful than the previous down moves. We should have very little bounces along the way.

The next major stop for this count should be 1040 or below. However, the only concerning thing for me is that wave [ii] retraced over 61.8% of wave [i]. But wave 2's are typically deep, especially at the start of a new downtrend. We also witnessed some deep wave 2's at the start of the downtrend in late 2007 and early 2008. So it's nothing unusual.

As I said before, the primary count has us in Minor wave 3. The alternate count, however, is a little different.

The alternate count is that we completed Minor wave 1 early this month at 1010. Currently, we have the end of Minor wave 1 at our June 6 low at 1040, which was a truncated wave [v]. Also, since we had a leading diagonal for wave 1, it is very rare to see a truncated wave in a diagonal, but we had to fit that in there.

But with this alternate count, there is no truncation at the end of Minor wave 1. It has a more "perfect" look. But this means that we are tracing out Minor wave 2 right now, which means we have some more upside to come.

It seems that we have completed wave [a] and may have completed wave [b] with the low on Friday, or atleast are very close to completing wave [b].

Wave [c] of 2 could easily take us to 1140-1150 with this count.

So yes, the counts are that we either go up or down... but this means that we are a very crucial point in the market. Monday should determine the direction. Basically, if Monday is not a decent down day, we may have to drop the current primary count. So if Monday is up, then the alternate count is in play. If we break down on Monday, the primary count lives on.