Elliott Wave views of the S&P 500 rally with differing implications

There are a few Elliott Wave counts being considered by EW analysts and we'll take a quick look. First, here's Tony Caldaro's evening update at his site, along with his hourly chart of the SPX:

"The market rallied to a new high for the rally (805) by 1:00, then pulled back to 796 by 1:30. After about an hour trading under the SPX 800 level the market rallied again. Heading into the close the SPX hit 823, up 23% from the low posted on March 6th. For the day the SPX/DOW were +6.95%, and the NDX/NAZ were +6.45%. Bonds dropped 14 ticks, Crude gained $1.75, Gold lost $18.50, and the Euro rallied. Support for the SPX notches back up to 789 and then 768, with resistance at 848 and then 912. Short term momentum shifted from fairly oversold on friday to overbought today. Tomorrow, FED chairman Bernanke's testifies before Congress regarding AIG.
After the SPX pulled back from 803 to 768 thursday/friday, a 0.236 retracement of the rally from 667. Today it wasted no time regaining that drop, and adding another new high for the rally to 823. For now, we're leaving the short term count as is: a five wave rally to SPX 803 completing Minor wave A, and a small pullback to SPX 768 completing Minor wave B. The rally should now be in Minor wave C of the first Intermediate wave (A) in our anticipated Primary wave B rally. Best to your trading!
MEDIUM TERM: uptrend still not confirmed, as market continues to rally
LONG TERM: bear market
CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987 "

Another point of view is suggested by Andre Gratian in his closing comment this afternoon, and I don't want to just give it away to non-subscribers but let's just say it is more consistent with the ChartsEdge alert about today closing at its high of day and looking for some weakness over the next day and into early Wednesday. EWI has also suggested a 5-wave count up that, in their view, would be the opening move in a substantial large second wave up; so any weakness over the next day(s) would be just a pullback before an even stronger wave up.

Well I give respect to these views, but I think we should entertain the possibility that there remain yet other alternative counts. This is the reason why I'm definitely focusing on the Fibonacci retrace levels that price is working with. Price movements over the next several days can help rule out some of the alternatives. For example, resistance at the 830/838 level, if we see it, would be a big clue. Right now that level doesn't seem so far away, but that can change if we see a pullback first.

One question I've got is that if we accept the classic EWI idea that gold heads downward now or very soon (this is consistent with a view they've had for a long time) - and today's drop in gold probably gives them hope they're on the right track - how does that square with a big rise in equities? Okay, they can decouple. I've certainly been an advocate that each chart should be evaluated on its own merits. But it does seem antithetical to believe that gold is readying to make a big move down, while equities are readying to make a big move up. So I'm feeling skeptical about both of these views working out at the same time.

The views I've referenced above all point toward another and more significant rally ahead of us, whatever the amount of completion of the initial wave and however much pullback occurs first. Here are a couple of other EW ideas that I think can remain valid alternatives. One is that we're putting the finishing touches onto a second wave up of a diagonal that points down and has the equities markets making a couple of additional new lows. I tend to like this idea because it can be consistent with my other ideas about the markets (or at least the S&P 500) finishing a huge flat C-wave in the monthly charts (as I've annotated onto my monthly SPX chart). Of course, the very fact that I like this idea can be a source of bias so I'm trying to be careful about it! Besides, it has bullish implications once the C-wave would be done, and that just isn't consistent with what most analysts are projecting for the upcoming few years.

Another Elliott Wave idea that I think might be a valid alternative is that we're launching into a triangle that puts the markets into a sideways chop for weeks. This one doesn't "look" as good if you measure out the markets having just finished a 5th wave down after a 4th wave triangle - but then again, such a large triangle I'm talking about now could actually be one that turns into a triangle trap that pushes the markets higher. In other words, once we finish an "a" wave up, the "b" wave could express as a triangle before a "c" wave up that completes a larger (B) or (X) wave.

Yet another EW alternative I've considered is that we're in the C wave of a flat that can put the markets moving higher (such as to the 200-day moving average or the top of Terry Laundry's T Theory channel) for weeks. That flat could also complete a larger (B) or (X) wave. In either this flat idea or the preceding triangle idea, the (B) or (X) wave would be an interim rally point that would then see the markets roll over into the much lower lows in the year(s) 2010/2011 that many are expecting.