SPX, important! 3 scenarios forecast both bullish and bearish 2-4-2014

US continued to selloff and triggered/violated some important rules to Elliot Wave Theory.

I have laid down 3 important scenarios, most of which already adjusted due to violation of rule last night to the 1767 level.

Overall, the global markets seem to be having these probability:
Medium term downtrend - 80%
Medium term uptrend - 20%

SCENARIO #1 (20%) - Bullish scenario, what we had was just correction

Although what we experienced was 5 waves down, there could be a chance that the RED uptrend line has a support and the previous int wave i of Major wave 4 is a good area for support and we are still in an int wave iv correction prior to final int wave v.

An overlap/exceed below 1729 will invalidate this scenario. 


SCENARIO #2 (40% chance) -  slightly bearish correction, and we are just in the Major Wave 4 before a 5 new high.

SCENARIO #2 suggests that what we had for 1850 was just a Major Wave 3 peak of Primary Wave III, and we are inside the Major Wave 4 correction before we end to new highs to Major Wave 5 of Primary Wave III.

We could rally back 38.2% to 50% (1778 to 1790) before making new lows near 1635 (which is the 38.2% correction of the entire Major Wave 3.

Although this count will make the US markets extend again, I believe the chance this will happen is higher compared to Scenario #1.


SCENARIO #3 (40%) - Bearish scenario, Primary Wave III in, and Primary Wave IV is in place

Scenario #3 suggest that 1850 peak was already the Primary Wave III peak, and what we have right now is the Primary Wave IV correction everyone is waiting.

And the 5 mini waves could just be a minor a of Major A. Before the final Major C to finish Primary Wave IV. We may spend 1-2 more months at a minimum to go down-up-down-up-down-down.

Comparing the Primary Wave II correction last 2011, it retraced to 38.2% of the entire Primary Wave I (around 20% correction estimate). If we are going to follow exactly the 38.2% retracement, we have a target of around 1560.

I preferably want Scenario #3 to happen, the 2013 US rally was enormous at almost 32% and overextended its rally already. Time to shave some of the gains for this market to be healthy.


** 38.2% targets are rough estimate, and there are times market overextend to 50% to 61.8% retracements