The dam is ready to break, but when?

The funny thing about the market is it tries the patience of all. With a nice head and shoulders pattern in place and everyone talking about it, the question is likely not if it will be confirmed but likely when and how far a drop. One thing will be for certain, the move will not be text book.

From, here I have outlined what I think are the three highest probable paths the market will take:
- a bounce to the 910 area
- a solid break of the trendline with a selloff to the 780-815 area to finish off intermediate wave B
- a solid break of the trendline and an eventual move to new lows




Scenario #1: A Bounce
This is the fakeout scenario. This is where all the bears who recently got short have to cover and all the bulls believe we are heading to new highs. This is the scenario that will assure us that this is intermediate wave B and later in the year we will head to new highs. I'm looking for a close above 890 for this scenario and a strong up day tomorrow.


Scenario #2: The Bullish Sell Off
This scenario leads to an immediate and strong sell off tomorrow. As strong as the sell off is though, the market will begin to regain composure in the 840-850 area while the market continues to make its way to the 815 zone. Under this scenario, the bears will be disappointed as the market will regain its footing much to their dismay and begin a choppy range bound assent to new highs later in the year.


Scenario #3: The Bearish Sell Off
This is the beginning of the next leg of the bear market. Primary wave 2 will be over and the market will head to new lows. This is where the market takes back all the paper profits that the retailers gained off of the March low and likely some more as the Bulls try and catch a falling knife and the Bears who were looking for a bounce get run over in the fall. If the market does sell off tomorrow, watch what the market does on the way down. No need to be a hero and try and catch the turn perfectly when there may not be one.

Summary
So where do I place the highest odds? I would say scenarios #1 and 3. Both of these would hurt the most people (Bulls and Bears alike).