July 23rd, 2012: Update 1 - EOD

4:55 pm EST:  With the drop below 1345 today, the primary count is modified to have wave (1) of minor 3 of  major [3]-P3-C3 ending at 1380 and the drop to 1337 has a wave (2) of minor 3.   Wave (2) looks to be complete today 1337 for a perfect 78% retrace of wave (1) at the lower boundary of the blue upward channel.   Note that the limit for this wave (2) is at 1325 and any correction below 1325, will eliminate the primary count in favor of the alternate (blue) count.  Off the 1337 low today, it looks like we have 5-waves up for wave i-(3) of minor 3.  I’m expecting wave ii-(3) to hold above the 50%/62% retrace at 1345/43 tomorrow, before iii-(3) of minor 3 kicks into high gear heading above SPX 1400, see the 15-min chart labels and targets.

For the alternate (blue) count the drop to 1337 today looks like a completion of minor A of major [2]-P3-C3 after the major [1] wave ended at 1380 as a Leading Diagonal (LD) off the SPX 1267 low from early June.   Wave minor B of major [2] completed wave (a) up today at 1353 and wave (b) of  B should hold above the 50%/62% retrace of 1345/43.   From there wave (c) of B will target the 1359/63 area or a 50%/62% retrace of minor A.  Note that a Leading Diagonal will typically retrace 62%/78%, thus, I’m looking for minor C of major [2] to reach the 1314/1294 area.  The absolutely limit of the major [2] retrace is the June SPX low of 1267.   Below 1267 we have something a little more bearish intermediate-term going on with the SPX, like a continuation down of major [C]-P2-C3 towards 1249 to 1207, with [B]-P2-C3 having completed at 1380 as a double ZZ up off 1267.  We will monitor this possible count, ”IF” the SPX breaks down below the 78% retrace of 1294.

SP-500 15-min chart (EOD):

SP-500 60-min chart (EOD):