We have hit the lows of the year and the "Santa-Claus rally", which would be Minor wave 2 up, has begun. I had been calling for Minor wave 1 down to end in early October 2011 for some time, as well as a downside target of 10180 on the DJIA and 1040 on the S&P 500. The downside targets were not quite reached, but I nailed the time frame quite well. The DJIA reached a low of 10404 and the S&P 500 reached a low of 1074 on October 4, 2011.
Here is the updated chart of the DJIA, showing a projection for Minor wave 2 up.
Minor wave 2 up is projected to last 3 months with an upside target of 11930 for the DJIA and 1260 for the S&P 500 by early January 2012. One of the defining characteristics of this bear market rally, which appeared quite often during Primary wave  up, is the tendency for wave 1 to be the extended wave within a larger advance. This means that we can expect that within Minor wave 2 up, for Minute wave [a] to have 1.618 times the length of its first subwave, Minuette wave (i), and that Minute wave [c] will follow the same pattern.
Here is a longer term chart, showing Minor wave 2 up within the context of the larger picture.
Minor wave 2 up represents the right shoulder of a much larger head and shoulders top in the stock market, where the April 2010 high is the left shoulder peak, the May 2011 peak is the head, with the right shoulder peak yet to form in early January 2012. The head peaked a fibonacci 13 months after the left shoulder peak, and the right shoulder peak is projected to occur a fibonacci 8 months after the peak of the head. The target for the head and shoulders pattern is also arrowed on the chart, which would be around 8250 on the DJIA, to be reached sometime in late March / early April 2012.
We are in the beginning of three months of reprieve. The reprieve period will last through the rest of the year. We may even see the European debt crisis go into remission for a short time. This will be a chance for people to enjoy the holidays in November and December while the economic and political fault lines are temporarily stabilized.
However, 2012 promises to be a very nasty year with Minor wave 3 down poised to get underway in early January 2012.