When I look at the lack of congruence between cycles analysis, the elliott wave count and seasonal patterns, everything seems to be out of whack - a technical term meaning "what the heck is going on?"
The move down from the recent November high is clearly not impulsive on the intraday charts. This makes it difficult to conclude - as much as might want it to be - that wave (C) down in a flat correction is underway. On the other hand the various stock indexes are really not in sync with the impulsive count from the July low either. For some, the rally from the August low just does not look all that impulsive, which does not fit with the idea of a 3rd wave.
It is beginning to look as though we could be in the worst possible outcome for traders, one that I have suggested a few times, but had forgotten about over the last couple of months. Folks, we are probably in a very large [B] wave triangle. For the Qs, it would be a running triangle. For other indexes it would be an ascending triangle. This would explain the lack of clearly impulsive moves, the corrective quality of most of the swings, the slight new highs to new highs, the long wave (B) which is common in triangles, and the continuing strong performance by top-rated stocks. We are running out of time with respect to the coming cycle low due between mid-December and mid-January, so we would really have to a sharp decline develop soon in order to define the cycle low. Should we see such a sharp decline it would most likely be wave C of (C) for the triangle case.
If this is a triangle, then given the overall time of development so far, it may take well into March for it to reach a resolution. Fortunately, the fact that the Qs would be presenting a running triangle eliminates a bearish resolution of the triangle. My view at the moment is that we must wait and see if the July/August highs are touched to rule out the 4th wave count. If that happens, unless we see a powerful move that undercuts the August low before December 21, then the probability that the current market action is a very large triangle rises greatly.
So what should we do now? I will be looking to exit short positions at a 61.8% retracement of the July to November rally unless the August low is broken before mid-December. After that I will be looking to be only long until the top of wave [C] while using waves (C) and (E) of the unfolding triangle to build long posiitions.
Triangles can be frustrating affairs, but once recognized confidence in the outcome increases greatly. My hats off to the elliott wave bloggers that are keeping up with the intraday counts. Some are really good, and I plan to add them to my blogroll soon. However, tracking the intraday moves can lead to a myopic view of potential outcomes. Let's see if clarity develops over the next 3 to 4 weeks with respect to a possible triangle count.