12/2/200810:42 PM Pacific

This chart of the NASDAQ e-mini futures from Monday night (Tuesday morning ‘s report) is the primary piece of evidence that I am basing my bias on for 5 waves down from the recent high. It is pretty clear and with clean ratios. I almost always get better detail from the e-mini futures than cash for wave counts.

But what if it is 3 waves down? This 60 minute chart of the S&P cash below could easily pass for 3 waves and it also stopped right at the .500 retracement of the recent holiday high. My preferred count is that we completed 5 waves down. My preferred thesis is in the report from this morning. But, here is contingency road map just in case we already completed 3 waves down, and price breaks out to the upside in a big rally. The first thing that should occur if we completed 3 waves down is a push to 872, followed by a small retracement or pause. This will probably be followed by a push

12/2/200810:42 PM Pacific

higher to 905-912. A small retracement or pause is a key factor here. It is possible to get to 872 and still complete the preferred pattern from this morning (a dump would follow a tag of 872). However, a rally toward 872 would definitely tip the bias toward higher prices sooner rather than later and would more likely follow the higher price path. . Similarly, a breakout of the NASDAQ100 at 1136 toward 1161 would favor a continued rise to 1198. I am obviously talking about a big rally here. It could occur in chunks or be come more quickly based on some catalyst. Regardless, if the move off the bottom was 5 waves and the retracement is a completed 3 wave set (5-3-5), then 912SPX and 1198NDX are only a few waves away. $SPX 60Minute

12/2/200810:42 PM Pacific

$NDX 60Minute

You now have a price map for the most probable outcome in either direction. TMD/DW The market detective provides personal market opinion based on sound technical analysis and research. However, no warranty is given or implied as to its true reliability. The market detective will make errors and mistakes. The market detective is not an investment adviser and is not making recommendations to buy, sell, or place orders relating to the futures contracts, ETFs, or stocks that he writes about. The responsibility for decisions made from information contained in this service are solely that of the individual subscriber. The individual must fully research and make his/her own decisions before acting on any information provided by the market detective. The market detective assumes no responsibility for subscriber investment or trading results.