S&P 500 - My favorite count is still well and alive

The above chart (30 minutes) show my favorite count. As can be seen we are now in the early parts of wave iii of 3 down. This should be a strong and powerful move to the down side, so what I would like to see is resistance at 1,085.20 protect the upside for a break below 1,045 and even better a break below the bottom of wave 1 at 1,011.50, which would put my runner-up count (see the hourly chart below) to sleep - finally.

If we see a break below 1,045 and even better a break below 1,011.50 we should see wave 3 head for 978.69, at least, but a more likely target for wave 3 would be 904.66.

If however support at 1,045 holds and we see a break above 1,085.20 the below count, will take over as the preferred count and allow for wave C up to the 1,131 - 1,140 area as the end of wave 2 and set the stage for wave 3 down.

The Investor Sentiment chart below show, that the bears are gaining the upper hand. If one draws a trend line from the top October/November 2008 that trend line is clearly broken to the upside, giving the bears the upper hand.

If you take a closer look at the chart below, you will See, that every time we have and important top or bottom, we do see divergence. The bears was at a low point in July 2007 at bears made a second higher low in October 2007. The same thing was seen at the top in October 2008 and March 2009 and we have just seen a low in January 2010 followed by a higher low in May or June 2010. All pointing towards and important bottom being in place for the bears and they are slowly, but surly gaining the upper hand.