I did an annotated SPX (S & P 500, http://bit.ly/i0nsT) chart last night, showing the Elliott Wave count since 4-26-10's 1219.80 cycle high, with a few indicators (Williams %R and ROC, both at extremes, ROC turned sharply down), and, I posted it on yfrog/Twitter (http://twitter.com/tradethecycles), see http://yfrog.com/e3p0dp.
The 1040.78 cycle low on 5-25-10 clearly appears to be a Wave A Monthly Cycle low (also Wave 1 Down), and, the 1131.23 cycle high on 6-21-10 clearly appears to be a Wave B Monthly Cycle High (Also Wave 2 Up), see http://yfrog.com/e3p0dp. The decline from 6-21-10's 1131.23 cycle high until July 1's 1010.91 cycle low appears to be Wave A of Wave C Down (a small Wave 3 Down move, relative to the larger Wave 1 move), and, the current Monthly Upcycle since July 1's 1010.91 cycle low appears to be Wave B of Wave C Down, and, a Wave 4 Up move.
The big question is (obviously assumes SPX (S & P 500) didn't bottom on July 1) how severe will Wave 5 down = Wave C of Wave C down be? The extremely bearish six month 10 Year Treasury Yield Lead Indicator, see http://finance.yahoo.com/q/ta?s=^GSPC&t=6m&l=on&z=l&q=c&p=v&a=fs,p12,fs,w14&c=WMT,XOM,xlf,^tnx, suggests that Wave 5 down = Wave C of Wave C down might be severe (Wave 5 moves can be/often are huge and rapid), with SPX possibly hitting 760ish, filling the 768.54 gap. However, in the same lead indicator chart above, the six month Walmart (WMT) Lead Indicator (probably the second best lead indicator) isn't overly bearish.
I've been assuming that SPX (S & P 500, http://bit.ly/i0nsT) will probably fall to 900 to 950 in this Intermediate Term Downcycle since 4-26-10's 1219.80 Major Cycle High, filling one or both of the downside gaps at 940.38 and 905.84. However, the severe case is also a definite possibility, with SPX possibly hitting 760 to 800, potentially filling downside gaps at 811.08 and 768.54. There's also a downside gap at 676.53.
However, especially in an election year, and, given how fragile the economy is, the Fed will vigorously try to prevent a severe market crash scenario from unfolding, by pumping massive credit into the market. So, SPX (S & P 500, http://bit.ly/i0nsT) will probably fall to 900 to 950 in this Intermediate Term Downcycle since 4-26-10's likely 1219.80 Major Cycle High, filling one or both of the downside gaps at 940.38 and 905.84.
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