The primary count, a 2nd wave / (B) wave or E wave retrace, discussed in Terminal Wave (7/8/11), has been tracking well. To date, the broader indexes (SP500 and Wilshire 5000) have retraced more than 50% and the rest of the pack just a bit shy of 50%. Wave structures and time cycles now hint at a decent chance for a low (2/(B)/E(4)), at least an interim low (e.g., [a] of E of (4), or [w] of 2-down). See Chart 1.
Regardless of the wave count, one thing of note is how range-bound U.S. stock indexes have been in 2011. Stocks have just returned to the middle of the range. Moreover, the current range coincides with a decade long support/resistance zone (Chart 2) highlighted on numerous occasions here. From this perspective, the current consolidation is likely similar to the one in 1999 (Chart 2, green circles) whereby the market manages to consolidate for months before making a “Terminal Wave (7/8/11)”.
One thing is for sure, the range will be busted.