Elliott Wave 5.0 "Reboot"

Monday, February 8, 2016

SP500 Intraday Crash Review:



This is not the Mini but the cash contract. With its sharp decline this morning it has not pushed to a new record low, but now has formed two long spikes to the downside. I see this as a positive, but a new downside could still happen.  It would do so as a 3 wave structure, not with a 5 wave impulse. 

I am a real stickler into watching how a new low is created as there are huge differences in their outcomes.  Being lazy and calling a 3 wave decline a 5 wave decline will never work.  In case no new low is achieved in the next few days, then this can stand as the start of a diagonal 5 waves. 

I changed my trend lines for a reason as this is what a diagonal crash can do. It's just a smaller version of the 2007-2008 decline.  You don't want to think impulse decline when in reality it is a diagonal or an "ABC" decline.  

The January 11th decline sure looks like it can fit an ending diagonal very well, so that also helps to support a potential bullish reversal.  This SPY00 has about 300 points to go, to break a new world record high, which not too many believe can be done.  It is a big mistake to underestimate the markets to rally after they have been pointing down for sometime, especially if it is pointing down,  with a 3 wave structure.