Elliott Wave 5.0 "Reboot"

Saturday, January 9, 2016

January, 9, 2016 SP500 Daily Chart Crash Review


The SP500 added on another leg down on Friday which is understandable as traders/investors do not want to be long as they go home for the weekend. It's very easy to sell into this market as panic seems to hit the Shanghai as well. This can fuel a cycle of bearish moods as the world turns in its 24 hour cycle.  Who caused what, where and when will never be figured out, but I am sure China will get most of the blame. Or can we blame it on the North Koreans with their so called Hydrogen Bomb test. Chances are good that this test was a fake as earthquake recorders can tell the difference.

  What it all produces is fear and the VIX can confirm this by adding on yet another leg up last week. 
The VIX is completing what seems to be a 5th wave, then a correction or a reversal should be due soon. The VIX now has many open gaps below with just one remaining open above present prices. 


As we can see the plunge in January of 2016 has been very steep, matching the angle in the August 2015 crash, or even the angle of the October 2014 crash. In about 15 months or so investors have seen zero index gains as crashes keep wiping out any gains they may have had. 

Trying to count out a clean set of impulse waves is like finding a pot of gold under the rainbow. We can only see very small sets of 5 wave runs and even those look like diagonal wave structures. 

Since this present crash has dipped into my wave two and pattern must now be called an ending diagonal, and I am starting to push that to the max. Any sign that this market is going to go sideways, like a potential small degree 4th wave then another leg down will happen.  The question is if any down leg is going to happen this time or a big rally interferes with the bearish plans that the market thinks it has. 

The Nasdaq has not confirmed such a big dip and has a huge open gap above present prices. I count about 3 open gaps in the Nasdaq alone. At the 2040 price level this SP500 chart also has an open gap, so sometime in the future this gap will also get closed off.   

Any trend lines I draw are going to be very subjective in nature, as catching a falling knife is not something the majority as a herd will ever do. I doubt any of these bullish experts are calling to "buy on the dips".