While the recent chart movement is as expected by that model, I think the updated model below is probably more correct. It's also always good to add the threat model which in this case is that 4' will occur before 5'. The primary model never has the ' (prime) modifier on its numbers.
So, to be clear, my first primary view is that the red path will be taken. It is drawn stretched out horizontally along the time axis more than it will likely take to achieve. In fact, the next expected wave is 3 of 5. 3rd waves tend to move the most quickly of any in the motive sequence (although "tend to" clearly does not imply "always").
Once we get a lower low in the DJIA, S+P500 and $COMPX I think that market fear is going to move up a notch. Put options will begin receiving a price premium based on this. For the record, I plan to sell my Intel January puts and my recently acquired January puts into this weakness because I do not want to hold them through the biggest rally that is expected since the start of the collapse. I will probably get back into the same puts at much lower prices after that bounce and then, I suspect, the puts will skyrocket as wave 3 of the coming crash plays out.
During the 3rd wave is when put options are LIKELY going to get serious respect and their prices will reflect it.
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