After Friday’s pullback, we enter the new week with Energy on a long/buy signal and Biotech on a long/buy Alert and all the remaining indexes on sell/short Alerts.

I’m presenting four wave count scenarios moving from bullish to bearish in potential outcome. The most bullish scenario is seen just below where a triple zigzag has played out. For this count the 200MA combined with the 50% retracement level of 3500 provided support and the turning point. Should the SPX make a lower low, this count is invalidated.

Should the SPY take out the recent low and find support between that low and the 61.8% retracement level ~3200, then this next scenario comes into play. This count is a double zigzag count where (A)=(C) at ~318 SPY. This count would then require the SPY to move to a new all-time high without taking out this new low.

The next two scenarios are far more bearish. The leading expanding diagonal chart shown below requires minor wave 5 to exceed the length of minor wave 3. If wee see a break down below 3340 before a significant bounce, then this scenario begins to present as a possibility. That drop below 3340 would complete minor wave 5 of [A]. Once complete, then a significant bounce in [B] should retrace at least 50%, but typically much deeper retracements are seen following a leading diagonal. Then, once everyone is convinced the SPX is off to new highs and the new bull market is underway, the SPX rolls over and impulses down.

Unlike the expanding ending diagonal above, the scenario below doesn’t have a requirement for the SPX to drop below 3340 before a significant bounce. Additionally, this scenario could witness a much shallower retracement in (2) of around 38% compared to the much deeper retracement typically seen following leading diagonals. This zigzag as labeled below has a target for [C] where [C]=1.618[A] @ ~2,400 SPX.