Wave counting is a very imprecise guessing game at the best of times. The present time is even more tricky than normal, with two deeply opposing forces soon to meet. We have the seasonal 'Santa rally' vs the 'fiscal cliff uncertainty'.
The weekly rainbow chart is now sporting a very clear blue candle, warning of a change of trend. That candle could be green by the Friday close if we break into the 1400s.
The monthly chart outlines my broad bearish scenario. It would of course need to get thrown out, if we break the QE high of sp'1474.
Santa vs the cliff
As many have come to recognise, it sadly seems the US politicians are again going to fail to reach an agreement, and that we will likely go over the cliff. Such tax rises and spending cuts would most certainly result in a very significant recessionary Q1 2013.
Hwoever, if the market gets upset, and takes out the sp'1343 low, and declines hard into the sp'1200s BEFORE Christmas, then I believe the politicians will get spooked..and be 'pushed' by Mr Market to reach an agreement before New Years day.
My best guess - we will see a 5 wave decline into the early Spring, flooring somewhere in the low sp'1200s.
That's it for today. I will post something this Thursday, probably on the $ and/or WTIC Oil, both of which are always hugely important factors.
Goodnight from London