MTU Weekend Ed. - Short Term Update (4/20/12)

Based on price actions this past week, odds continue to favor the interpretation of a corrective pullback over an outright trend change. Furthermore, odds favor a fourth wave pullback over a larger X/B wave decline as long as short term support around 1345/1326 and longer term support around 1300 in SPX are intact. See Retest (4/13/12) for discussions.

We reiterate that “for the near term, the proposed fourth wave correction could take up more time and price range.”

Chart 1 presents top wave counts in SPX from its nominal high.

(purple - very bullish) The correction is (nearly) over in the form of an (A)-(B)-triangle (C) combination.

(green - bullish) The April low marks the end of the pullback. A leading-diagonal triangle (or even a series of 1s 2s) is in progress. The next upswing is wave E of the proposed LDT, to be followed by a sharp but successful retest of the lows.

(blue - bearish) Wave (B) rebound off the April low takes the form of an ABC-X-ABC structure. Expect lower lows after the final C wave of wave (B) is over.

Chart 2 does the same for NDX which has traced out a different wave structure.

Based on the tracking counts on SPX and NDX, odds favor one more near term upswing of uncertain size.  However, there’s no resolution as to whether the April low will hold.