Elliott Wave 5.0 "Reboot"

Friday, December 11, 2015

SPX And The VIX Elliott Wave Counts Review And The Junk Bond Crash!




Friday, on a new moon date we saw a nice drop or another mini crash in the SPX chart above.  This drop has now left a very sharp and straight spike. Since a nice pattern has not really emerged just yet, anything can still happen, especially if my "D" wave top in Primary degree is finished.  I can tell you exactly what the market has to deal with me in order to confirm a top. I need a zigzag type of a decline in Intermediate degree consisting of a 5-3-5 pattern. 5 Leading waves in Minor degree, then a flat in minor degree and then the final trailing 5 waves down in Minor degree. By the time the "E" wave decline is finished, we should see an Intermediate degree zigzag. 

This would all happen in a perfect world of a triangle, but the thing is there is no perfect world in any wave count. Wave counts must be reviewed on a constant basis to pick up as soon as we can when the wave count starts to fall apart.  I don't believe in the double expanded flat that all the GSC degree wave counters have created. 
        
This wave count could take very little to fall apart as after a correction it would have to resume its decline with a vengeance. 
I understand that the junk bond market is in trouble, but I only have a Carl Ichan rant on it. This can be the start of another liquidity crunch. Will Junk Bond Panic Lead to A 2015 Market Crash? | EconMatters


I added the VIX to this posting and here we can see the same spike as in the SPX except it is inverted.  This VIX has an open gap below and so does the SPX, but it would be a gap above present prices. Will the gap get closed on the VIX before it resumes the next leg up. If the crash from  the late August top to the late November bottom is a zigzag type of a correction, then eventually that 52-53 price  level will get retraced. It may be matched in price if a bigger VIX triangle is also still in effect. 

I have drawn an idealize chart to show what the minimum technical requirement should be if any part of this pattern is true. 




I had to look up the JNK etf to see the Junk bond crash myself. In this case a see a larger sideways market that can best be described as a "B" wave top, it would take a long time to work out a good wave count, but in this case it would not surprise me if the JNK market crashed all the way down and created a new record low.  I saw the news posting start to pick up last week, but as this continues I would expect many more news stories to come out and intensify. In short, it seems to be on the same stage as crude oil was in late 2014.