It looks like impulse lower and many are counting reversal.... with sharp third wave around the corner. Looking at different indexes,stocks, indicators and market breadth it is unlikely. It is a mixed picture I can not see neither strong bullish nor bearish case. If we have major reversal why DAX/RUT declined with a zig-zag? SOX/EEM close to finishing an impulse lower and retracement expected not third wave. BA has more to the downside but it should retrace first, or INTC it plunged but it should retrace first before continuing lower, or MSFT 11% from NDX it looks like wave i/5 for the missing final fifth.... there is many more examples. Market breadth - McClellan Oscillator below zero fo a month this is consistent with correction finishing not beginning. Cycles we should expect daily cycle low and 20 week cycle low.
What is the message from all that above? The extremes are not very likely. Bullish extreme the next leg higher begun is unlikely when some stocks/indexes reversed and other need final push higher to finish the pattern. Bearish extreme we have reversal and 1-2 with 3 coming next week 200 points lower does not look likely either when the stocks which reversed should retrace next or some are not done to the upside.
So what are the options - slightly bigger, but still wave 4 from ED shown last week or we have a reversal, but with zig-zag. I was showing on the weekly chart a zig-zag, which fits better because of time, inside this zig-zag wave a itself is a zig-zag(see daily chart). I prefer to see the first scenario with ED, it is always better to see clean finished pattern instead of struggling with some zig-zags.
TECHNICAL PICTURE and ELLIOTT WAVES
Short term - not sure, the move higher is corrective so which is it zig-zag higher or zig-zag lower..... no way to say until we see the next few days.
If we see lower low I do not think it will be third wave more likely wave c of a bigger pattern.
Intermediate term - if we have reversal with impulse the next move is lower 200-250 points for w3(red). It should move very fast something like 2 weeks because RSI already touched 30 the oversold level and it does not really look like reversal just starting. The only way to override the message from the indicators and market breadth is waterfall decline. Looking at RSI the worst scenario I see is the circles with one more low and we are currently where the red arrow is. Usually this waterfall declines start form a higher levels - green arrows.
In green is shown the ED pattern from last week with 5=1,236x3 hitting the trend line around 2990-3000. In yellow is this zig-zag story.
Long term - one more leg lower to finish wave IV from 2009. If the decline already begun, zig-zag will fit better both time and pattern. If we see one more high decline in C wave impulse will look good - because of possible expanded flat B=1,236xA(see daily chart) and it will push the high a few weeks later.
I am not sure how to count this w1, but this is the alternative.
MARKET BREADTH INDICATORS
Market Breadth Indicators - signaling that the indexes are nearing intermediate term low, but no way to say one more low or not.
McClellan Oscillator - below zero for a long time.
McClellan Summation Index - sell signal.
Weekly Stochastic of the Summation Index - sell signal in oversold territory.
Bullish Percentage - pointing lower.
Percent of Stocks above MA50 - in the middle of the range.
Fear Indicator VIX - nervous markets one more lower possible so one more push higher.
Advance-Decline Issues - in the middle of the range.
HURST CYCLES
Day 44+4 close to a daily cycle low or already behind us.
Week 21, as I wrote last week my indicators are telling me this is 20 week cycle low.
