Elliott Wave Update ~ 18 October 2012 [Update 5:10PM]

UPDATE 5:10PM:
Bonds weekly. At the lower wedgeline. Things are getting interesting.

ORIGINAL POST
Primary count is Minor 5 up of Intermediate wave (C) of a double primary-sized double zigzag from the 2009 low.

Yesterday we projected that Minute [i] of 5 was about finished and then a pullback Minute [ii] was expected. Today's price action fits nicely into that count.  More pullback is expected. Target box is (minimum) the local virgin space for a wave [ii] pullback.

Overall count of Wilshire5000 wave (C) of [Y]:

Converting the same count to the SPX we get some interesting layouts with the Fib lines.   Wave 1 more or less at the 38% Fib. The "virgin space" more or less at the 50% Fib and wave 4 resides at 62% Fib.  We can then project the Minor 5 high based on Fibonacci  relationships and the "right look".

Minor 5 is supposed to finish higher than 1474. So .618 x 1 = about 1485.

But no matter, we are specifically looking for five Minute-sized waves from Minor 4 low of 1425 SPX. The waveform will be the key, not necessarily the price level.

TOP BEARISH COUNT
SPX 1425 must be broken to the downside. Simply put, we need a lower low. We cannot rule out this expanded wave (ii) flat.

Be on your guard for the most unexpected. And the most unexpected may indeed be a collapse of the market.  A lower low may start to trigger a cascade of stop losses.

We still have - after all - a valid rising wedge pattern that may be exhausting. People have tended to dismiss this wedge pattern particularly since prices have maintained for a number of weeks. However the wedge was over 2 years in the making so I really don;t know what is "acceptable" for prices to be hanging about the upper wedgeline.  It still "looks" right.

Local candle action within the context of the above wedge: