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Wednesday, January 27, 2016

Elliott Wave Update 27 January 2016

Adding to our charts yesterday. Note how the VIX has "reset" to a much lower volatility level versus the August panic. Prices are lower than in August (and yet had fell pretty much the same amount) yet the VIX did not reach panic levels on the recent decline. This is an example I think of how the market works off oversold and works off overpanic via time. This fits perfectly in how wave theory unfolds.  The market seems to be setting itself up for a very big downdraft but in the meantime, the squiggles must play out first.

Best count options below:
The eventual big selling downdraft would be the downside target of the broken head and shoulders pattern for starters. Since it would be a "third of a third" - wave [iii] of 3 - it should be more panic than in August, and thus the VIX should go higher than in August.

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