The preferred count has had the ES in the 4th wave of Minute W3 since mid-December. To this point it has taken the form of a zig-zag which alternates nicely with the flat formed by wave 2 of the sequence. EW rules have been met so all would seem in order, and it's likely that the coming week will bring a move up to new ATH's in a continuation of the rally that started on election day.
HOWEVER the correction has taken a bit longer in time and cut a bit deeper in price than seems reasonable. If the ES keeps selling off from here then there are a couple of alternate counts that may be in play. To understand those alternates let's look 1st at a longer view of the preferred count:
(NOTE: dotted lines show structure necessary to complete the formation and are NOT intended as a price/time forecast)
As can be seen, this count has the ES in a Major W5 that commenced at the lows of last February. The count has the ES currently in Minute W3 of Minor W3 of Intermediate W3 of that Major W5.
The 1st alternate still has the ES in Major W5 but postulates that Major W5 is an ending diagonal with Intermediate W3 of that structure just complete and Inter W4 in progress. Inter W5 will follow W4 and end in the top for both Major W5 and Primary W III:
The 2nd alternate has Major W5/Primary W III complete at the highs of last August with Intermediate W C of an irregular flat Primary W IV in progress:
If the ES keeps moving down from here the top of Micro W1 @ ES 2211.75 is the point at which the preferred count is invalidated - that would represent an overlap of W1 by W4 which is not allowed in EW rules:
