Bottom line -
U.S. stocks are now approaching the middle of a fib turn window for the Hope Rally.
There are now enough waves from the November low - too many waves at times - to help us narrow down major candidate counts. We also list subjective assessment of the associated probabilities.
In Ready, Set, ***!(2/13/12), we observed some interesting Hope Rally fibs (see discussions therein). "If wave [Z] should last a Fib 5 (+/- 1) months, the projected end of the Hope Rally is early February (5-1 months) or early March (5 months) or early April (5+1 months)." U.S. stocks are now approaching the middle of the proposed fib turn window as Chart 1 refreshes.
Regarding near term wave structure, the most reasonable interpretation of the November low is likely a wave 2 (more bullish) or a wave B (with terminal wave C advance well under way.)
As such, we now have enough waves to narrow down major candidate counts. Subjective assessment of the associated probabilities is also listed. See Chart 2.
(most likely) [blue-main] Wave [iii]-up since the November low ended early February. Wave [iv]-down is developing as a flat, triangle or sideways three. The pending high is (b)-up of [iv]-down with wave (c)-down to follow. While wave (c)-down of [iv]-down could be a deep one, wave [v]-up will likely push the market well beyond the current high.
(less likely) [blue-alt] Wave [v]-up since the November low is already in progress. Concerns with this count are two-fold. First, if the proposed wave [iv]-down is a triangle spanning late January and mid February, no net retrace is realized in SPX. Second, if wave [iii]-up actually ended in early February and wave [iv]-down ended at the past week’s low, wave [iv]-down likely took too little time to develop, especially in view of alternating with the deep retrace of wave [ii]-down in December.
(likely) [green] Wave [iii]-up from the December low is ending, where wave (v)-up of the proposed wave [iii]-up is an EDT. Expect a swift pullback with initial target around 1300 in SPX. There's more downside potential if the advance since the November low turns out to be just an ABC structure.
(likely) [red] Wave [v]-up since the November low is ending. Expect a pullback toward 1300 with potential for more if the advance since the October low turns out to be just an ABC structure.