In the last couple of days the markets perform a swan dive, (not a Black Swan), followed by a fast rally right back up again. The present rally looks like an impulse, but the last wave crossed to new highs as a 3 wave pattern, which was part of a diagonal “C” wave. In order for this starting decline to be in a bigger bearish trend, then all the markets need to push much lower, this summer. Just in case todays rally has been just a single diagonal, then all we would get is a deeper correction followed by the real “C” wave.
If the markets are over the hump, then after any bullish news comes out it will ignore this news and eventually push lower. This is the exact opposite of what happens in a bull market. Depending on what Cycle degree 4th wave pattern we get and all the bearish news doesn’t push the markets any lower, then this could be time for a big reversal. This may happen when a “B” wave in Primary degree gets close to starting. For now I will be looking for the first 3 waves in Intermediate degree, leading to the “A” wave in Primary degree.
The VIX sure performed as hoped for, but the gap it left on the way up, may stay open for a very long time. That is fine from my perspective, as I know far in the future the VIX will crash again and crash right back down and close that open gap.
Anything can still throw a monkey wrench into any wave count, so hopefully we can catch any errant wave counts early enough to adjust. This is where constant reviewing on the intraday scale needs to be done.
The SP500 had a 24 month Market Vane report of 70%. Last week this number hit 69% for 5 solid trading days in a row. That sure spells out a major bullish top to me.
Again, I would like to stress that there is a very good chance that the markets will never go below 2009 lows this time, as Steven Jon Kaplan has already mentioned that as well. Even if it did go lower, then this is not a big deal, as all that would have happened is an extension we missed. Price does not change a Cycle degree crash to a SC or GSC degree crash. Prices will be massively oversold far before it ever gets to a real bottom, so any bearish wave counts will eventually get trashed leaving you no time to accumulate large bullish positions.