[Update 6:40PM: Update on TLT. Note that the count is that TLT is in wave three of five, a count that mirrors equities suggesting that they will turn around the same time.
The DJIA has made a new low thus confirming the view that the indexes are tracing 5 waves down from the 2011 high.
The selling pressure, although intense, is still less than what occurred in wave [iii] down in early August. This supports the view that this is a wave five.
Yet even though bearish sentiment is building again, the SPX still has not breached its 1101 SPX wave [iii] low. The call is that it will but it may take a circuitous route to get there.
The 60 minute chart below shows one such possibility: Be on the lookout for a choppy ride lower in some kind of ending diagonal pattern as the market exhausts itself of selling. If of course things become more intense than what occurred in the early August selling, then we may have to switch the view to Minor 3 down instead. But for now there is no reason (yet) to believe we are in Minor 3 down.
The ending diagonal wedge pattern has a history of developing at significant market lows. It occurred exactly 4 times in the 2008 downturn at various degrees to include Minor (twice), Minute and Minuette that I can think of off the top of my head.