Whether or not the move up from 11:00am to 1:40pm today was an impulse or not is open to debate. It had some impulsive qualities, but as frequently happens with ending diagonals the market may extend for another test of today's low before moving decisively higher. The midday move higher occured after the completion of a smaller degree ending diagonal. The selling into the close was clearly a correction which is a positive for Monday.
One possibility that is coming to the forefront is that wave [b] of B up is developing as a triangle in the Qs. If this is the case, then we completed wave (c) of the triangle today with waves (d) and (e) to come next week. This would almost certainly put the completion of wave (e) on Thursday or Friday next week with little net progress for the week just in time for the 2nd quarter GDP report and the June employment numbers. What a nice way to keep us all in suspense for another week.
Any way you look at it a triangle is a bullish outcome for the next several weeks at least. If the market breaks out to the upside after the economic reports, I calculate a target of around 50 for the Qs. If the market breaks down after the economic reports, then we could still have a triangle at a smaller degree which would be wave (b) of [b] of B. This would lead to a retest of the February and May lows with wave C up to the May 13 high to follow. I tend to doubt this outcome based on the action in leading stocks and commodities this week. Oil and copper both turned up nicely, and lagging sectors look ready to turn up as well including housing stocks, XHB, and the financial sector, XLF, and also CME, e.g.
Overall the action this summer has been as dull as it has been volatile. For all the action the market just isn't going anywhere. I believe the adage is "Never short a dull market". I don't know if it fits this market, but it feels like it. I've been sitting on my hands now for over two weeks watching my account oscillate with the market. I've only taken one new position and that is BIDU on the triangle breakout, and yet none of the positions that I have taken since the Flash Crash have have violated their stops, and the action is generally bullish, so all there is to do is wait and see.
I will be occupied with family obligations most of next week, and may not be able to post. However, if I see a significant change from the outlook that I have given this week, I will do my best to let you know.