The big picture
Chart 1 updates the current top big-picture scenarios. These top scenarios are the same as those highlighted last week in Squiggles Point the Way (6/18/10). The reversal over the past week most likely has started minor 3-down of intermediate wave (1)-down (red labeled count).
By definition, the reversal (sell-off) over the past week has confirmed the end of the rebound since the Jun 8th low. Thus according to all but one of these counts, the near term trend (in terms of a time frame of at least multiple weeks) has now turned down.
The green labeled count which places the end of minor wave 1-down at the June 8th low still calls for a rebound above last week’s high (1131.23 in SPX). The further the decline, the less likely this count becomes.
On the bullish side, there’s a small chance that the June 8th low marks the end of pullback since the April high and the market is aiming at new highs, if one reads 7 waves within April-May pullback. But there is so much for the bulls to recover under this interpretation before its status can be rationally elevated at all. Since the weekly commentary tends to focus on the bigger picture, it is fair to mention it here.
Short term (in terms of multiple days) outlook
(i)-down or (i)-up?
Squiggles may point the way again this time. Friday’s low is likely either (i)-down of 3-down of (1)-down (which is very bearish), OR Friday's high is likely (i)-up of [c]-up of 2-up of (1)-down (which is bullish in the short term). See Chart 2 for a squiggle count.
The U.S. Dollar
There has been a lot of focus on the count of the U.S. Dollar index (DXY) lately. I present my preferred counts in Chart 3 and Chart 4.
In terms of the big picture, the current advance (most likely as (1)-up of -up) from the late 2009 low in the USD index will likely exceed 90 or even 95 when complete.
At the moment, the USD index is either in wave 4 (blue labeled count) OR only [iv] of wave 3 (green labeled count) of this advance.