INDU SPX fibonacci ratios
The price ratios of the past month and a half caught my attention late Friday.
I had as my primary count a motive wave starting in late April '10 and ending in late May '10. The rally into June '10 as a corrective wave. So far this wave has corrected 36% of the sell-off in less than 20% of the time. Under this wave count, more sideways correction with a push to 50% retracement levels would be appropriate. The rest of June would choppy and slightly up. This is a wave 1-2 count.
When considering this latest bounce corrects the sell-off following the "flash crash" rally, 47% has been retraced in more than 85% of the time. This indicates the probability is higher the bounce is finished. This wave count is 1-2, 1-2, 1-2, which makes 3 degrees of trend.
What makes me now favor the cascading wave 1-2 combinations is the amount of bounce after each decline. The first decline had nearly 90% retracement. The "flash crash" had 50-62% retracement. I've taken out some of the flash overshoot. The late May sell-off had almost 50% retracement. None of the retracements are triangles or flats. A triangle would signal one more sell-off leg before a retracement of a larger degree is to begin. Flats signal the beginning or ending of the longest subwave of a motive wave.
What we are looking at is a waterfall crash in progress. The question is how many degrees of 1-2 combinations will appear before the jaw-dropping 3-3-3-3-3... wave appears.
