The developments of the last 2 trading days make me consider the whole rise from the post crash bottom to the last week's high as a W2 Kane ABCD:





Timewise it doesn't look good because it rarely happens in a zigzag that CD leg lasts 80 times longer that AB leg. But if it comes to proportions - it's almost perfect: AB and CD legs are nearly equal and whole ABCD retraces between .685 and .786 of the preceding leg down from the top.

Initially I thought that whole zigzag should finish at May 11th high. Now I see that high as a C point of a W4 correction in the CD leg:





The behaviour of the market in the next couple of days should help us jugde whether this interpretation is correct. This is rather important because in such case we should expect a drop to at least 1020 (1.272 external retracement of the ABCD) and probably much lower if W3 down has just started.

Looking good so far, jarek. Careful right in here in case it's a bearish 'W2'. Not likely, but just watch it.

I didn't have time to post it as I was 'busy', but I was watching 16.50-17.50 there for that possible 'W2'. We saw the reaction dead off the area, but only a bit, and now up again. I doubt it needs a 'retest', so I suspect up it goes for another leg now, but let's see, in case it does 'retest' and fulfill the bearish 'W2' scenario.

Taking out point C or D will most probably decide the direction for the rest of the day:

Will this small ABCD save the bull case for today?

No it didn't and now a failure of the bigger ABCD looms as a result

... and here it comes:

Now we should see if the sellers are really serious:

Originally posted by jarek

Now we should see if the sellers are really serious

Looks like not necessarily:

Classic Waves 1 and 2 (small ABCD of course) off the pattern and up it goes:

ABCD right back to the same line it rolled down from. But they don't usually do that unless they want up and over, so that's what I'm watching for.

I suspect a big run up in GLOBEX and a huge gap up over that line. We'll see. The weekends are getting longer and longer as the inevitable blowup gets closer.