I added my wave count upon Micheal's chart to show you the broken MACD trend line.We finished primary wave [1] from 1576 to 666 in 2009 May. The five waves down inside primary wave [1] are almost textbook wave pattern with a triangle intermediate wave (4), the red triangle line in the chart. I think we also completed the counter wave primary wave [2] at 1080 on September 23 with a three corrective wave structure (W)-(X)-(Y).
The primary wave [3] down has started already, and it is supposed to be catastrophic wave, if we have five primary impulsive waves down, because "wave 3 is never the shortest wave" and "the center of wave 3 almost always has the steepest slope ......"
Also pay attention to MACD triangle, the red dash lines in the chart. This is my favorite "Triple Negative MACD Divergences" ®© pattern. SPX made three higher highs on May, August and September, but MACD could not make a higher high. More important, MACD made a decisively cross down and broken an ONE YEAR long term trend line started from 2008 October. This is another very strong bearish trend reversal signal, indicating primary wave [2] ended and wave [3] started.
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