The bullish case is down, but not out at the moment. The main bullish count that could lead to new highs above 1219.80 is explained under Option 4 on the 60 min counts page and shown close up in last night's update. Here's how the count shown in last night's update looks at the moment - I've updated it to take account of today's decline:
SPX 1 min - bullish alternative under Option 4:
If we take out 1088.01, this [i]-[ii]-(i)-(ii)-i-ii count is out. We could still be in an expanded flat wave (ii) however - that would only be invalidated below 1056.88.
If we were to take out 1056.88 as well (perhaps not today!), then this bullish alternative would need to be adjusted to the leading diagonal possibility I referred to last night, which always has to be considered when you see what might look like a series of ones and twos. Here it is on a 60 min chart:
SPX 60 min - bullish alternative under Option 4: leading diagonal:
As noted in last night's update, this count would stand until we take out 1010.91, so the bearish case could still disappoint until that level goes.
You'll see from the chart that the leading diagonal could be all of wave A of the third zig zag from the March 2009 low (see the alternative count on the second chart on the "Zig Zag from March 2009" page for the bigger picture), or it could just be wave [i] of A. The latter would obviously be very much more bullish.
The bad news for the bears is that even if we take out 1010.91, it doesn't mean we're on our way to zero. You'll see from the page entitled "Impulse from March 2009" that the count shown there can accommodate a decline below the 1010.91 low in a wave (2). This is something to be on guard for because if we take out 1010.91 and it turns out that this is the correct count, it could catch alot of shorts on the wrong side.
