http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p18894193176&a=214966864

Now, this is what happens when you rely on your memory in making an analysis.  You make mistakes.  We made mistakes in the application of the rule of seven in our previous letters.  Then something someone said made us go back and check Sklarew —

Arthur, Techniques of a Professional Commodity Chart Analyst. Sklarew, an analyst beloved of analysts,  described the procedure.  We misapplied it from memory and after rereading Sklarew we have produced the above chart.  Basically the new analysis moves the target closer, so that at this point prices have achieved the second target.  Also, of interest, the third target at 1322 is very close to the 1320 target found by measuring the formation.  Interesting.

Also, prices are very near the wave low stop.  If this occurs we think investors should be fully hedged or flat the market.  If it occurs we will address conditions at the time.