The wave structure, in both the SPX and NDX, has developed in a way that allows for two Alternate Wave Counts. Each Wave Count has equal “probability” at this point in time, and both STILL support the case for further declines ahead for the markets. The only impact each Alternate Wave Count has is on the level the current correction will reach before the next leg of the decline resumes.
I will begin with the SPX.
SPX Alternate Count I: The current corrective rally is Wave ii of (iii).
The current rally is correcting the decline in the SPX from 1125.50 to 1087.06. This decline was five (5) FIB trading days long in TIME. The normal FIB retracements in PRICE are:
(.618) 1110.82
(.764) 1116.42 (the actual high on Friday was 1115.27)
(.786) 1117.27
Under this scenario, the market could still open slightly higher on Monday, but then reverse and continue the decline for the balance of the week.
SPX Alternate Count II: The current corrective rally is the next Higher Degree which would be Wave (ii).
The current rally is correcting the decline in the SPX from 1163.23 to 1087.06. The initial Wave (i) decline was thirteen (13) FIB trading days long in TIME. The normal FIB retracements in PRICE are:
(.382) 1116.16 (the actual high on Friday was 1115.27)
(.500) 1125.15
(.618) 1134.13
Under this scenario the “minimum” retracement level was hit at Friday’s inter-day HIGH; but one cannot rule out that the higher FIB retracement levels MAY still be reached before the next leg of the decline resumes. But what I CAN rule out, is using 1126 on the SPX has an alternate STOP LOSS. Now the driving STOP LOSS level remains 1461 on the NDX ;which will be discussed below regarding the NDX.
NDX Alternate Wave Count I: The current corrective rally is Wave (iv) of 3.
The current rally is correcting the decline from 1494.67 to 1368.08. This possible Wave (iii) of 3 decline was sixteen (16) trading days long; which is NOT a FIB TIME target currently, but could be in five (5) more trading days as it completes Wave (v) of 3. The normal FIB retracements, under this scenario, in PRICE are:
(.382) 1416.44
(.500) 1431.38 (the actual high on Friday was 1431.23)
(.618) 1446.31
Under this scenario, the NDX could continue the decline it began late Friday; but I cannot rule out that the higher FIB retracement level of 1446.31 may still be reached before the decline resumes.
NDX Alternate Wave Count II: The current corrective rally is Higher Degree Wave 4.
Under this wave count the current rally is correcting the Wave 3 decline from 1524.09 to 1368.08. This possible Wave 3 decline was twenty-four (24) trading days long, which is FIB (21) plus (3) trading days long….STILL a probable TIME scenario. The normal FIB retracements in PRICE are:
(.382) 1427.67
(.500) 1446.09 (here we see 1446 again, as described above in Alternate I)
(.618) 1464.50 (this however would violate the Apex of Wave 1at 1461 and NEGATE the entire bearish case)
Under this scenario, the NDX could still move up to the 1446 level early next week before the decline resumes. NOTE: That 1461 level MUST NOT be violated to the upside for the b Bearish wave structure to remain in force.
I am keeping my STOP LOSS in the NDX at 1461. A violation of 1461, to the upside, on the NDX would force a Fund Exchange from the current RYVNX position(since 1/08/04) to RYVYX.
Currently, I a have position in the RYDEX Venture (RYVNX) Fund since 01/08/04 within the Aggressive Portion of the portfolio; while the Conservative Portion of the portfolio has been in Cash or Cash equivalents since 01/02/04.
IMHO
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