Elliott Wave 5.0 "Reboot"

Saturday, January 23, 2016

Mini SP500 Intraday Price Rally Review:




This rally has so far gone a bit further than I like, but it sure looks corrective in nature, so anything can happen. If my bigger wave count has completed, then we could be faced with a diagonal 5th wave pattern which makes it much harder to track well.  That is the nature of the beast and we may not find out until the next strong downward move is just about finished. 

What I see between my two trend lines is an ending diagonal in the Micro and Submicro degree levels.  I have to stay true to the bigger wave count until such a time when it falls far outside any acceptable parameters.   If at anytime I change my impulse degree level to an Intermediate degree, than I have breached my entire wave count and end up in the SC degree trap. At best I have one move in Minor degree which would contain 5 moves in Minute degree, but if I start with my first wave in Minor degree, then I have fallen out of sequence killing a wave count that has started in 1929. 

Don't get me wrong, I believe this bottom will get breached again as this rally has trashed the idealized wave pattern already.

This still leaves it open for a diagonal 5th wave type bull market so we have to wait and see if this is in progress now. 

The VIX has crashed, leaving a big open wound (gap) so this supports a bearish mood in stocks, but the VIX also has many open gaps still well below present day VIX prices, which is bullish for stocks.


Apple has also roared, leaving a gap in its wake.   The Nasdaq came to a screeching halt at 4000,  but also has left an open gap in its wake. Of course the Nasdaq has many open gaps so there is lots of volatility that can happen in both directions. 


All higher degree wave counters (SC degree and higher) desperately need  a 5 wave decline labeled in Primary degree.  I think they will continuously fail if they do not review their entire wave count starting back in 1929.