[926PM]Futures squiggles (ES)-
[855PM]Bullish thoughts continued -
To continue the train of thoughts on the bullish side (4PM update) -"However, note that senior indices are still shy of their August highs and today's high did not reach traditional fib targets." - today's high may be iii of (c) of 2 (or B).
In fact, such interpretation may present a better form regarding the larger wave structure. In addition, we have a zigzag down in the futures so far and the sell-off has stalled for the moment.
Wave iv of (c) of 2 could be tracing out a triangle (or some complex structure) to buy some time - it's too early to tell - and thus for wave v of (c) of 2 to exceed the August high and hit the red turn date towards the end of September (see Chart to the right). This will accommodate a thrust based on a potential QE2 announcement by the FOMC next Tuesday (Sept 21st).
In terms of the larger wave structure under this interpretation, please see the following charts on the cash index (orange labels) and futures. Note that I have not been fond of the green barrier triangle in the cash index as an attractive way to label the structure.
[638PM] futures update -
Futures (ES) continue to sell off after the cash market close. A very deep retrace so far threatening to make a lower low.
[4PM] Today saw speculations about a QE2 announcement as early as next week. The Dollar plunged, gold surged, bonds did their due retrace of the recent sell-off and stocks continued their way to the August high.
Intra-day wave structures hint at a potential top at today's high. Better yet, we've potentially had a first five down and a subsequent three up (Chart 1). If the top is in, it makes a nice truncation for minor wave 2 or respectable vindication for minute wave [ii]. Chart 2 and Chart 3 update the large picture wave counts for SPX and the Dec Futures.
In addition, the wave structure in the Russell 2000 index (RUT) is interesting. I've mentioned that the RUT may be leading the market as they did at the 2007 top [see Moment of Truth (9/10/10)]. That thesis is still applicable with today's squiggles (Chart 4 and Chart 5).
However, note that senior indices are still shy of their August highs and today's high did not reach traditional fib targets (as highlighted in Real Time Update). So it is prudent to leave room for for v of (c) to extend with today's high as  of v of (c), as noted on Chart 3. Also leave room for the current high to be only (i) of [c] of 2-up (or B-up) - which implies a deep retrace nevertheless.