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Anyways, Prechter had theorized that a 7-7.5 year time cycle was in play since March 2009. This cycle holds prices up through the first half, then aligns bearishly in the second half and the end should point toward a major bear market low. Combined with two other long cycles in simultaneous play to include a 34 year cycle, all time cycles will be aligned bearishly lower as soon as this 7.5 year cycle loses its upward force. He theorized prices for whats known as primary wave  would top early in the 7.5 cycle. So far that is the case.
Below is my chart which visualizes nicely the 7-7.5 year cycle and its affect on prices. We had 5 waves down from the May 2011 top, so we must assume this is a wave two retrace. I have counted this chart from a "double three" cycle corrective rather than the accustomed P, P, P, P and P of cycle wave c.
In the end, the pattern won't matter much. If his cycle work is correct, and if a very low uber-deflationary price collapse is coming, well, we can argue about the waves when the DJIA is sitting at 1000 or below. I agree with the price target - DOW 1000 (1970's support) - and his cycle work seems to be playing out as predicted. Say what you will about Prechter, but his cycle work is second to no one and is worth the subscription to his EW Theorist which has been in publication for over 30 years.
Thats about all I'll divulge on his time cycle work as I can not really do it credit as he does and he deserves the subscription for you to get the whole picture directly from his research. I can merely tell you thats its the best and its fascinating.
ORIGINAL POSTPrimary count is that today kicked off wave (c) of [y] of double zigzag Minor 2. Target range for wave (c) is 1269 - 1310 SPX.
1269 is where wave (c) = .618 x (a) within wave [y]. 1310 is where wave (c) = (a).
1293 is where wave [y] = .618 of wave [w]. 1293 is a preferred minimum price so that wave [y] finishes higher than wave [w] in price which is a strong guideline.
So 1293 - 1310 is the preferred target range for wave (c) of [y] of Minor 2.
TIME TARGET FOR MINOR 2:
First week of January 2012 represents where Minor 2 = a Fibonacci 3 months. This is in relation to a Fib 5 month decline for Minor 1 down resulting in a very nice 5/3 time ratio.
January 9th is the 34 month Fibonacci time ratio since the March 2009 low. Though we count Primary wave  as topping out in early May 2011 at SPX 1370, having a deep retrace Minor 2 above 1300 SPX on the 34 month anniversary of the 2009 bottom would be appropriate.
So ideal time target is January 3 - January 10th.
Prechter's 7.2-7.5 year "UP" cycle started in March 2009 is heading toward its mid-point. So from a cycle standpoint, there is not much "push" left to keep prices sustained. Once the 7.5 year cycle "loses force" and rolls over and aligns with the other time cycles the 20? - (I forget off the top of my head) - and the 34 year are already pointing down, then the full force of a social mood down swing will finally be upon us.
The top bearish count has the market completing a 3 wave counter move already. The SPX has already hit the 61.8% Fib retracement from the recent decline.
I don't think this is a very great 5 wave count down from 1267 - 1202, but it does follow the rules at least so it has to be included for consideration. If the bottom falls out on prices we can say this may be correct. But I am not holding my breath on that. An upside day such as this usually has a follow through day lurking just down the road even if tomorrow is a consolidation day or so.
Overall today was a 97% up volume ratio day on the NYSE and the NASDAQ registered a 91% up volume day. The diverging VIX that I have been alluding to over the last few days was predicting today's rally. And yesterday's positive divergence in Breadth Thrust panned out.
Additionally, there is a big dollar futures up gap from 78.64 to 79.21 that should get filled. So the dollar likely has some retrace left in it.
A look at the daily: