Saturday, June 15, 2013

MTU Weekend Ed. - Short Term Update (6/14/13)

The analysis in Tracking Update (6/7/13) and the three proposed scenarios continue to be applicable (Chart 1).

The decline from the May high to the June low counts best as a three wave structure.

As such, the blue wave (4) pullback remains the most likely at the moment. Wave B-up of (4)-down is in progress.  Wave C-down of (4)-down should push SP500 towards 1550 in SP500, unless a sideways triangle develops.

If the market has topped as suggested by the red count, the initial sell-off is most likely a 3-3-3-3-3 leading diagonal triangle.  The June low is likely the first small-degree three-wave drop.

The recent pullback being a small-degree wave (iv) off the February low, as suggested by the green arrow, appears less likely.  However, given this past week's development, we need to be aware of a w(three)-x-y(triangle) structure.  Under this interpretation, Friday afternoon's sell-off is wave [E] of the triangle y.  An upward reversal to new highs should follow once wave [E] ends (Chart 2-black  or the red count in this chart).  However, as discussed before, the upside potential is limited in this case to the lower 1700s in SP500.