Some Elliott Wave practitioners bracing for equities downtrend to resume

Readers here know that in addition to practicing my own Elliott Wave counts, I also reference Tony Caldaro's Objective Elliott Wave work. We're counting the SPX and most equities indices as working out a "minute wave 2" rally that when finished, will give way to a deeper wave 3 down soon. This does also fit with other methods, such as other featured analysts here like Andre Gratian (who's being conservative about looking for confirmation which I appreciate); and that cycles work by Jim Curry I posted about last night here. It also fits with work of another cycles expert I rely on but am not allowed to quote (sorry! but his work is thorough, and only by subscription). Will SPX 1067 act as a lid that caps off this wave 2? Well it could go higher, but doesn't "have to". Given the consequences of a wave 3 down, it doesn't feel good to play this from the long side other than playing intraday. Are there clues if the wave 2 is done? Maybe.

I tweeted today that I expected some EW'ers would be analyzing a possible ending diagonal wedge to cap a wave "c" of 2 at 1066 or 1067. Sure enough, I found there's at least one, among the bloggers at Tony's OEW site. This OEW follower is "pongfu grasshopper" (cute profile icon too!), who posted the chart copied at bottom below, in some posts made this afternoon at Tony's blog. The last such chart link being at the end of the trading day, as the apparent wedge seemed to complete, here. It mirrors what I was thinking this afternoon, and I'll bet that other EW'ers were wondering the same.

But it takes a subsequent movement to confirm any EW pattern so we must await a break of the lower trendline in that channel, which would probably break under 1061 as Tony mentions in his OEW site (link above, and always at right (plus his updates feed at lower right too). What about that "head and shoulders" idea? Well today's rise on somewhat lower volume edges the market closer to it. The Dow's rise retesting 10,000 "looks" more like a right shoulder - the different indices have different angles for the right shoulder, as some are weaker than others. A h&s target in SPX should be 960, although I'm more focused near-term on 982 which is a familiar support-resistance line (see my SPX daily chart below). You probably won't hear people talking about a h&s idea these days since they got burned by that back in June/July. That doesn't mean it won't happen though. In fact it probably increases the odds that it will materialize!

Looking ahead to tomorrow, it's reasonable to think in terns of either an inside day or a slight followthrough. It's too much to expect a bearish engulfing reversal. So we'll most likely have another Friday that will leave us with competing bull vs. bear counts, at least theoretically (meaning, leaning to the bearish but without a confirmation likely until next week).