Saturday, 6/8/13 update

Nice rally in the ES/SPX off Thursday's lows which pretty much confirms the idea in Thursday's update:  a zig-zag correction into the lows with the "c" leg of that zig-zag forming an ending diagonal.

If Minor W4 is not yet complete, then the current rally off Thursday's low is either an "x" wave which will lead into another zig-zag selling sequence or it's the "b" wave of a developing triangle (not shown in chart) with the May 22 to Jun 6 zig-zag being the "a" wave.  If a triangle, then there is a wave c, d & e yet to come before Minor W4 concludes.  

There is another possibility, and that is that the May 22 top is not the conclusion of Minor W3 but is actually the top of Minute W3 of Minor W3, in which case the Thursday low would mark the termination of Minute W4 with Minute W5 thus currently in progress.  That would mean new all time highs in the short term to mark the top of Minor W3 before more selling in the form of Minor W4 ensues.

This view has some credibility for several reasons.  First, the rally from mid-April into the May 22 high has the steepest slope of any rally series since last November's lows, which evidences the type of acceleration that typifies 3rd waves in equity market sequences.  Second, the low of last Thursday occurred right at the lower trendline of the channel that delineates the bull market from last November.  Finally, the character of the bounce since that low is very clean and impulsive looking, more typical of a move with the trend then against it - i.e. it looks more like what would be expected of a 5th wave up rather than an "x" or "b" wave in a correction sequence.

A possible target in this eventuality would be ES 1695.00 where Minute W5 = Minute W1.