From ScalperJoe: snowrider, SPX did not close below the Wave [I] top, but simply breached it intraday, do you still consider that as a breach of the original wave count? By the way, futures just opened recently and look weak, ES at 1,289.
ScalperJoe - The price action these days has shown that the market was very weak (and could be continue doing so before some reversal force occurs). It is the
Newton's First Law of Motion that can easily explain the market's behavior:
"
Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it."
We shall stay on the bear side until we see a reversal bar. We should not reverse our short position unless a reversal bar tells us otherwise. Also, it really does not matter whether the 1293 is broken or not because the index should not go this deep if it is still a bull market. Trading is an art, and it's hard to explain why. It is like seeing a piece of art work, some people like it but some don't.
The following quote is from my blog last Friday:
"...The market closed near day low again today, with same trick as what it did everyday in last few days, the market sucked and trapped more bulls (again) in the morning before moving down in the afternoon. The weekly chart closed as a long solid black candle bar - very bearish in long term view. If the current preferred wave count is correct, a 3._3.__3 wave is underway. We will see a big gap down and with a killing collapse very soon (next Monday?). Remember that this bear run is far from over! DO NOT buy into any dip!"
From ScalperJoe: I agree with your logic, however I'm still trying to differentiate between corrective wave patterns within the context of the larger timeframes. If the original Elliott Wave count began with the October 2011 lows, my understanding was the wave count remains intact so long as the TOP of Wave [I] isn't breached, which from a closing basis it wasn't (as of Friday). In other words, could it still be a valid "ABC" corrective pattern, whereby 1,422 is still the top of Wave [III]?
ScalperJoe - It could be that case because the market stopped right above the 50% fib retracement. If that 50% area holds, we don't rule out the possibility of the wave [IV] scenario, which means that the market would come back to test 1400 area for a wave [V].