PRIMARY COUNT IS STILL [b] of MINOR 2
The market achieved a 38% retrace. [b] waves can retrace deeper of course but not too deeply (its not supposed to be a wave two) and it should hold in general some kind of upper support layer and not a support of last resort. That quality supports probably lies in the 1086-1090 area. The critical support is probably 1065-1072. The 20DMA lies around 1089. Gap support at 1089 also.
Again we have to use EW logic to interpret where we may be:
1. Since the count up from 1042 probably counts best as a 5 wave move, we should either suspect it is finished at the 1131 high in a Minor 2 peak, or we will get another 5 waves to a higher peak to form a 5-3-5- zigzag count for Minor 2.
One rule of thumb I find is that if everyone has that count (particularly EWI), it likely won't pan out. So I am cutting against the grain a bit here.
2. The top alternate, indeed many have as a primary count, is that this 5 wave move from 1042 to 1131 could be a [c] wave of Minor 2 up in the flat/expanded flat count.
3. To me, the count depends largely on my dollar count. If the dollar makes a C wave lower, I strongly suspect that equities will rally to a higher high above 1131.
So hence my primary count is that this is a [b] wave pullback and that eventually the dollar will fall harder and the markets will rally higher pretty much in unison. If my primary count is wrong (which implies the dollar primary count is likely wrong), then the market will let us know soon enough.
The dollar is moving into position for putting in its own B wave perhaps. Then a C wave should take it back toward a decent price retrace for Intermediate (2). There are other possibilities going on here of course. But until it proves otherwise, I see no reason to change things.
The move down from 1131 peak looks like a zigzag "three" at the moment. Perhaps we will see more waves forming a clearer structure. At any rate, for this to be a [b] wave count, support is going to have to hold somewhere soon.
Its almost as if the wave pattern is predicting some bullshit that will move the dollar in a bearish mode and the markets in a bullish mode come the end of the FOMC. Its coming to a key juncture here in the wave structure. Not that it matters in the long run even if it manages a new market recovery above 1131, primary count says it'll turn down anyways.