Wave ii was essentially a zigzag (more noticeably a zigzag in other indices) and the proposed wave iv is a clear flat, so there would be alternation. But the November decline lasted a month and the late January correction took less than two weeks.
The SPX futures chart shows that the proposed wave iv tagged the lower rail of the uptrend, which gives more credence to this count:
We can also see that three Fibonacci extension targets converge in this area, suggesting that some kind of top could occur there.
A somewhat more bullish scenario calls for a correction of a lesser degree in the 1340 area followed by a rally to a cluster of Fibonacci targets in the 1500 zone for a Wave 3 top. The penetration and weekly close above the rising blue trendline suggests this scenario may have some validity. After consideration of all currently available data I am tending to lean towards this scenario.
The bearish count could see a C wave top at any time. Any break of the uptrend off the September bottom would put this scenario in play.
The 161.8% Fib extension of the proposed A wave comes in just a few points shy of the 2007 high, so its conceivable that Wave 2 could retrace nearly 100% of Wave 1 before failing in a Wave 3 bear market.
http://www.dailymarkets.com/stock/2011/02/20/sp-500-technical-chart-analysis-powerful-wave-3-bull-market-rally-not-over-yet/
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