More Scenario Planning

Scenario #1

Scenario #1

Note that while "B" could reach above "b" in the above chart, it doesn't have to.

However, a final kiss of the lower trend channel and psychological resistance at 2,000 would be an ideal R&R (retest & reversal) level.

It is also possible per the above chart that "A" is not finished. As long as the eventual wave "C" stays above 1474.51, the September 2012 high, scenario #1 holds merit.

Scenario #2 treats current market action as a developing impulsive move which would call for the current rally staying below 1926.03 and fading soon.*

I don't like scenario #2 for the reason that the subwaves of the assumed wave "1" are sloppy and irregular, which leads me to think they are corrective rather than impulsive.

Key distinction between the scenarios is that #1 would see eventual new all-time highs. #2 would result in a retest, and likely a failure, of the 2009 lows.

*Caution is high after the futures blew an overnight rally and are now down .4%. Both DAX and CAC futures were up close to 3% last night. They each reversed and are down  over 1%.

Therefore, if the current bounce gets below 1956.85 without a new high prepare for another new low.

For a bigger picture, I'll dust off two additional charts (not updated) that might help visualize how Scenario #1 could fit into the overall picture.