Bottom Line: The sell-off into the close most likely confirms that B-down of (Z) IS/HAS BEEN in progress. The remaining probability mainly belongs to the possibility that [v] of A-up of (Z) is still tracing out an ED. One count also marks today's high as the end of primary wave .
Additional details to follow.
[Primary Count - red labels & lines] Wave B-down of (Z)-up has been in progress since the 3/17/10 high (Chart 1). Wave B is likely tracing out a triangle or an expanded flat. Today's high is [b]-up of B-down. SPX is approaching (a) of [c]-down if B is a triangle, or is in the middle of (iii)-down of [c]-down in the case of an expanded flat.
Note the divergence between price and RSI leading up to the sell-off in Chart 1. Chart 2 offers a squiggle count of today's price action. Note the visible pickup in volume with the PM sell-off.
[Alt Count - blue labels & lines] Wave A-up of (Z)-up is an impulse wave. [v] of A is tracing out a potential ED. Today's sell-off is to conclude (b) of [v]. The blue labels and trend lines in Chart 3 and Chart 4 are self-explanatory.
[Alt/Wild card Count - orange bordered labels & green lines] Today's high marks the end of an ED which has been in progress since the 3/15/10 low. This is the count that raises the possibility that today's high is the top of primary wave .
This ED is much discussed within the Ewaver community over the past few days. I've expressed some concerns about this count which are worth repeating here..
(1) The current shape looks TOO wedgy (with the first leg of the ED being too long and itself appears to be an ED which should be an ending part not the beginning part of a structure ).
(2) If this ED is indeed playing out, it is possible that today's sell-off is (d) of the ED, with one more "three" to go, instead of (e) of ED. If so, it will alleviate the concern in (1) above.
But more importantly, this is one of those counts that accommodate the possibility that today's high (or when (e) is done per (2) above) could be the end of P2 (rather than A of (Z)). The orange-bordered labels in Chart 3 highlight this potential.
[VIX] This Update is not complete without mentioning VIX.
VIX has not only broken out various downward trend lines but also successfully retested them and is rebounding up so far.