False starts...

By 10:30 it looked like (iii) had started, by 12:40 all hopes of that were dashed as SPY penetrated what was labeled with a green i before. Now the chart is all messed up and many counts are possible. The fact that it is a triangle points to two distinct possibilities. This could be a small wave 4 before the final small wave 5 up of P2. The other possibility is that this triangle is minuette ii of P3. Because of the triangle I give those two counts the highest probability.
The third is that the impulse down at 2:45 started a subminuette wave 1 down and the bounce up at eod was wave 2 up.

Still has not crossed...but the time draws near. How long can we maintain these bullish levels?

Last day of the month...where is the start of a 3?

Where is the start of that (iii)? Heck any 3? Tomorrow should give us a clear indication of where we are. If there is not a sharp decisive drop, I will have to reevaluate the count and where (ii) has peaked or whether (ii) is a more complex correction, or even if P2 itself has peaked. But for now, there is not more to do than wait.
Here is a chart that I haven't posted in a long time. I came upon it when I was comparing ratios of random indexes to see what I could see. Note what happens when the 30ma crosses the 50ma from the top (the blue lines). This is a hard one to think about. The ratio of the index put/call ratio to the equity put/call ratio, what does that tell you? If you think you know, feel free to write in the comments about it.
BPSPX:CPC of course still has not crossed...but it close. I suspect a cross in the next few days.

Again tomorrow is key, if we do not get the decisive decline, then there is probably something suspect about my current count.

Things that make you say hmm...

I had three transactions trigger this morning before I knew it. I sold 2 call positions I had picked up on Friday and flipped into a put at 105.7. I had calculated that level the 38.2% retrace as the most likely level, and neglected to calculate C=2.618*A. That is the level we touched today, the 61.8% retrace of the recent drop. What's fascinating is that if you take a line parallel to the dashed support line and we start it at the peak, we cross the 61.8% retrace EXACTLY where we touched today. So if the count is correct then minuette (1) was 3.94 then minuette(3) should be about 6.37, which means it will end about 100.1. That is my next target to flip from short to long.
The 20ma as yet STILL has not crossed the 50ma on the BPSPX:CPC. Its getting close though. Whats interesting here is that I zoomed in and noted that the BPSPX:CPC was down today even though the market was SHARPLY up. This is an interesting divergence. If you think about it, the BPSPX is a bullish indicator and the CPC is also. When everyone is buying calls then the CPC is low (below 1 when more calls are bought than puts). Thus the CPC inflates the BPSPX during extremely bullish times, and deflates it during extremely pessimistic times. So even though the market pushed up strongly today, the indicator was down. This is bad news for the bulls.
VIX:SPX performed as expected it retreated from the 50ma. I expect it to take another shot at crossing over within the next couple of days.

Warning: This analysis is based on P2 having topped. You can pretty much throw everything out the window if we make a new high.

Again, it seems unlikely that P2 has not topped. The 108 level was a 50% retrace from the 150 high down to the 66.6 low. We had a distinct 5 wave move down from the peak. The BPSPX:CPC looks like it will be crossing soon, which would indicate an intermediate drop coming.

The Danger Zone...

Ok now that we seem to be out of that corrective mess(the recent rally). Counts are appearing more clearly. A was 0.84 long, B appears to be over as it has retraced 0.62 of A. Finally if C=A that would put C (and wave (ii)) ending at about 105.27, if C=1.618A then we are looking at the 105.7 region. The last level is fairly close to the 38.2 fib level at 105.6.
Now if it does turn at (ii) then we are looking at (i) which was 3.93 long. If (iii) is 1.618*(i) that would put its length at 6.34. So the target of (iii) would be 105.7-6.34=99.36. Wait, but that area is a support area that is a VERY well defined support/resistance. Its interesting how things line up. Below shows that support/resistance line as the dashed red line.

As we can see that area acted as resistance in late July and then as support in early August and then again as support in early September. Looks like we will be visiting it again soon.

The VIX:SPX closed right on its 50ma. It looks like it will make a trip to the upper BB, which would correspond to the run down for (iii). For now, the close below the 50ma points to a short term retreat in the VIX:SPX and a small rise on the SPX.
And of course I will be waiting for the 20ma to cross the 50ma on the BPSPX:CPC before I full commit.
Now...more Danger zone!

Looks like that was it....

We broke down again and tested the 104.5 region I had talked about yesterday. This breakdown was clearly impulsive. Near term I am looking for a retrace up to 106.3 to 106.7 area and then a continued break down after that.

The 20ma still has not crossed the 50ma on the BPSPX:CPC...so I am waiting before I commit more funds.My updated big picture with the top already in.

If this is it! Doo-wap, Please let me know...

The sell off at the end of the day looked quite impulsive. My target was 108.16 and today we printed 108.03. This triggered several of my orders at 108. We broke down out of a near term rising wedge. We are quite far from the support line for this Bull Rally which today is sitting at 98.57.

This is my big picture and we are awefully close to my target. The 104.62 is the 38.2% retrace back down from the peak to the 09/02/09 low. This also happens to be the area of support and where I see the bulls and bears doing battle next. If this is the start of P3, don't expect it to be a long battle.
I am not going to totally commit until the 20ma crosses the 50 ma on the BPSPX:CPC. Bullishness was at an extreme yesterday and we should see a significant pullback in the market to correct that.

And as it is popular these days...I leave you with the Huey Lewis and the News video..."If this is it!"

Update

The little bull pennant from last night has morphed into a bull flag. So again I am looking for a jump at the opening out of the flag and short term run up. The bull flag has a target of about 110. I still believe 108.16 will be the max...but if that is broken in a significant way then we are looking at the 62% retrace at 118.09.
The BPSPX is considered over bought if its over 70. Well its been over 70 since late July. My hybrid indicator BPSPX:CPC has very well defined wedge as compared to the regular BPSPX.

From StockCharts:
The Bullish Percent Index (BPI) is a popular market breadth indicator that is calculated by dividing the number of stocks in a given group (an exchange, an industry, etc.) that are currently trading with Point and Figure buy signals, by the total number of stocks in that group. Bullish Percent levels that are above 70% are considered overbought, whereas levels below 30% are considered oversold. Strong buy signals occur when the Bullish Percent Index falls below 30% and then reverses up by at least 6%. Conversely, promising sell signals occur when it goes above 70%, and then reverses down by at least 6%.

Something is going to happen...and soon...

For the near term it looks like a small bull pennant has formed. So we might be looking at a pop at the opening on Monday. Though I wouldn't know from what, futures are down slightly as I write this.
Here is my big picture with my long term green support/resistance lines. We are very near the end of P2. Everything is eerily calm. Obama has everyone focused on the healthcare initiative, no one is paying attention to the economy. Government guarantees on Money Market accounts quietly expired on Friday. Cash for clunkers has expired...how are those car sales going to be now?
It takes awhile for unemployment to turn around. People are still losing jobs and this Christmas looks like its going to be extremely tight. Those retailers who were hanging on in hopes of a good holiday season are really just the walking dead. Companies like Sears may not exist in their current state a year from now. I see P3 starting right before the holidays with consumers cutting back even more. This will lead to THE WORST RETAIL SEASON EVER. This will push everything down hard and fast next year imagine what 3 of 3 of P3 is going to look like. (For non EW people wave 3 is the sharpest and fastest move...and this will be move down).

Now here is my hybrid BPSPX:CPC chart, it basically saved me when I thought the downturn started in early July. When the BPSPX:CPC crossed the 20MA moving up it was a red flag to get out of my short positions. Right now it looks like its getting ready to tell me to take up short positions. Confirmation is when the 20MA crosses the 50 moving down. The ascending wedge for the 20ma is interesting. Because its a moving average on the Bullish Percent index, it is going to break down out of the wedge, there is no question if its going to break down its not like a stock. Its guaranteed to break down.
VIX:SPX has also formed a falling wedge that should break out any day now to the upside.

Hmmm....

I write this as I am coughing up a lung...Debating if 107.5 is close enough to my 108.5 target. Regardless I am taking up a short position in the morning. The market is at an extreme top. The economy is still tracking far worse than the Feds "more adverse scenerio" and they have declared the recession over...but in the more adverse scenerio unemployment is double digits for the next 4 quarters.

New forecast path...same target.

Trying to get back on track with blogging, but just too much to do all around. Anyway I adjusted my forecasted path though my target remains about 108 on SPY in about the same timeframe as before.
Basically I am expecting a bit of a pull back before the final thrust, but if we do hit 108 before any pullback...that could be it.

Still within Forecast...negative divergences...

Still sticking to that 108 prediction. It looks like we are creeping up that green resistance line. Market is still overbought and now we are seeing negative divergences. I expect a good pullback before the final push up.

Now the VIX has me concerned as we penetrated the red support line which has held for the much of this bear market.
Finally back to this Hybrid indicator. It got me into my short position and out of my short position in good order...its starting to look like its time to build a big short position again.