Elliott Wave Update ~ 17 July 2012

The best count(s) continues in either wave (ii) of [i] of Minor 3 down, or Minor 2 double zigzag with an SPX price high above the previous 1374 pivot is coming. My guess would be 1390ish if the double zigzag is in play or even a stab at 1400 again.

Sentiment is again a mixed bag. Via Sentiment Trader, we have 8% bearish extremes versus only 1% bullish extremes. So one cannot say that there are too many bears. That is simply not supported by the data as there exists more of a bullish sentiment rather than not. Even the  "smart money", "dumb money" confidence data is split evenly at 50% each.  One could surmise if the market creeps higher than 1374, sentiment data will get more positive and move toward some bullish extremes.

Here are some Sentiment data charts that support the bullishness in sentiment (and thus eventually bearish for prices).

Small Spec positions. Note the Stochastic

Short Term Extreme Model (STEM)

SPY Liquidity

Investor's Intelligence Bear %. (where are the bears?)

Hulbert's.  Extreme bullish territory.

Rydex Mutual fund ratio. 

So the above charts prove that there does not exist excess bearishness to "climb the wall of worry". There are really no worries it seems. The bearish sentiment data that existed as a result of the decline to 1266 SPX in Minor 1 down has been shaken out and then some.

So as we yet do not know if Minor 2 has ended or not, time and math is on the bears' side.

Even the VIX reflects complacency.  This complacency makes for a perfect setup for Minor 3 down.

Yet the NASDAQ 100 seems a bit muted since its pivot low.  Overlapping wave structure ever since.

CONCLUSION:
The primary wave count and sentiment data supports the notion of Minor wave 3 down to either continue with a big downside surprise day or Minor 2 will top and the market will turn down sharply.  In either case, the longer term count is bearish.