
This interpretation appears to be supported by
[1] the relatively more obvious action wave advance since the March low in RUT (Chart 2), INDU (Chart 3) and to some extent COMPQ.
[2] the big picture discussion in Unfinished Business 2011 (4/8/11).


Alternatively, the rebound this week may be finishing up wave (b)-up of the proposed [ii]-down, with a potential target around 1294 in SPX where the lower Bollinger band and the 50% retrace reside. Regarding the rebound from this week's low, the cash index is working on a five-up (especially considering Friday's after-hour rally) (Chart 4), while futures has traced out a three-up so far (Chart 5), while futures has traced out a three-up so far.

*** The top alternative count labels the advance since the March low as wave [x]-up of a larger correction since the February top (Chart 1, blue) which is yet to be completed . The implication is that the current decline will likely continue with potential to breach the March low. No recovery highs are in sight for the near term.

[1] the relatively weak market internals during the rebound from the March low
[2] the lack of uniformly obvious impulse wave structure across indexes
[3] potentially bearish developments in VIX and the USD index:
(a) VIX is likely finishing a five down and also approaching lows of the entire hope rally (Chart 6).
(b) The USD index is approaching another logical spot for a low after a post-"triangle" thrust lower or the low is already in place (Chart 7 and Chart 8).
*** A remote possibility is that the recent high represents a major top (or double top). The implication is that March low will not hold, with potential for significantly lower lows.