The good news is in live chat last night, we said we could 'likely expect a gap down opening - although there were no guarantees', and that is exactly what happened. So, we were at least headed in the right direction.
We have since reviewed many other counts including a) a triple combination - w-x-y-x-z - sideways wave that would have the same internal structure as a triangle, but that does not have the 'right look' because the x waves are not nearly equal in height. b) expanding triangle, but the problem here is now there would be two complex legs to such a triangle, and so, that is being ruled out too.
So, now when we recognize price is back below the C = 0.618 x A relationship we have spoken about in prior posts, we think the contracting diagonal scenario we said for all of Primary V makes the most sense. He is a picture of it on a three-day chart of the SP500.
|Ending Contracting Diagonal in SP500 - 3 Day Chart|
We think this is the count that matches best with the position of the Advance / Decline line at all time highs, and the fact that the Dow and SP500 broke through their all time highs.
This count utilizes the very slight truncation that we said was possible with the hourly chart, in our previous posts. A key to this count would be overlap of the minute b (circle-b) wave lower, and then Minor A lower.
The strength of this count is that is gives an exact accounting for degree labeling. We would now know almost 'for sure' that the August high was Intermediate wave (1) of Primary V, and zigzags would be expected for Intermediate waves (2), and (4). When price reached Intermediate wave (5), the up trend and entire bull market would be over.
We again completely admit to being wrong about the potential triangle - even though the wave signatures were there, and it was a reasonable count. But the count was incorrect for all of two hours!
Let's see if this count proceeds as expected. Again, a contracting diagonal must prove itself. But remember, we said from the time we broke out of Primary IV, that Primary V could occur as an impulse or a diagonal, and we had no preference as to either. If we get the diagonal, it should make wave counting much simpler going forward.