In last night's update I posted the chart of the double zig zag I've labelled from the 1 July low. I labelled it as complete at yesterday's high, but on the charts of 4 of the 5 Options I'm following for the decline from 1219.80, I labelled it as requiring one more high to complete, or complete at yesterday's close with a truncation.
Either way, the count implies that the double zig zag from 1 July is on the verge of completing if it hasn't already done so. Since triple zig zags are said to be rare, this would likely mean that we would also be at the end of the whole correction since 1 July.
That would fit well with us being at a 50% retracement level, resistance and a gap area, as shown on this 5 min chart of SPX:
SPX 5 min - Count 1 with double zig zag:
However, if we only have a single zig zag from 1 July (I posted this before the open yesterday but during the session I only updated the double zig zag count), then once that is complete, the market should fall back from there, but we'd need to be alert to the risk of a second zig zag developing to achieve a greater retracement than the first did. Here is the updated chart of the single zig zag count:
SPX 1 min - single zig zag:
The thing I don't like about it is that wave (2) of [C] is such a shallow retracement. Still that doesn't invalidate the count, so assuming its a possible count, it too could just about be complete, again, at the 50% retracement level, etc.
As I've said, once complete, the market should fall back and, if its the end of the correction, then the decline should be pretty swift, given that we would be in a 3rd wave down on virtually all the Counts I'm following (the exception possibly being Option 3 as explained in last night's update).
The trouble is that a double zig zag could develop at any stage provided that the wave [A] low isn't taken out. Having said that, the deeper the decline, the greater the odds will be that a second zig zag will not develop simply on the basis that you want a zig zag to look like one. Sill, unless and until the wave [A] low is taken out, it will be difficult to know for sure that the correction is over, so caution will be required on the short side until then.
Of course, I can't ignore the potentially bullish labelling I have on the chart of Option 3. This puts us at the start of a possible 5 wave move up for the first leg of a minor wave 2 correction of the drop from 1219.80, on the basis that we completed a leading diagonal minor wave 1 at the low of 1010.91. Here's a close up of this labelling of the move from 1 July:
SPX 1 min - impulse from 1 July low:
On the basis of the way I've labelled it, we're nearing completion of wave [3] of iii. Obviously, we'd expect a wave [4] retracement next. Here, we have a level to watch for that will raise the odds that we're not seeing an impulse up - 1042.50, the high of wave [1] of iii. Wave [4] can't end beyond that level. If it does, then the count as labelled is invalid.
So, if we are at the end of a correction off the 1 July low, we need to see a decisive and, preferably, swift, decline in 5 waves from wherever the correction ends. Anything less might have to be regarded as a potential warning that we only had a single zig zag up from 1 July and a second is now about to begin, or, that we are in a much more bullish and deeper retracement up, retracing the decline from 1219.80, not just the decline from 1131.23 (and on this latter potential, taking out 1042.50 would be a very strong indication that this impulse count is not happening).
