Saturday, July 13, 2013
MTU Weekend Ed. - Short Term Update (7/12/13)
SP500 is only 7 index points from making another all time high and Wilshire 5000 is effectively at a new all time high. Recent price actions support our primary count that the May/June sell-off in stocks is likely a 4th wave decline (Stocks and Bonds (7/5/13), Monthly Outlook Update(6/28/13)), which has successfully retested the breakout area (Post-FOMC Update (6/21/13)).
Chart 2 updates the bullish impulse wave count since the 2009 low. The May low counts as a 4th wave of uncertain degree depending on how wave  extends.
Chart 3 updates the successful retest of the breakout area.
For the near term, the upswing from the June low can be counted as a completed zigzag (Chart 4, blue and green) or even a completed five (Chart 4, red). Chart 5 offers the corresponding squiggle counts from the July low. It raises the interesting possibility of a wave (5) failure if a five-up is already complete - the likelihood of this scenario is debatable.
From a time perspective, the following week or so offers a window for a pullback. A pullback, if materializes, would fit as a small degree 4th wave or 2nd wave or some thing more bearish (such as a C wave) based on the EW counts.