Yesterday I mentioned that: ” Elliot Wave wise the absence of an impulsive decline or an Ending Diagonal suggests that price has not established yet a tradable bottom. Maybe what is needed is a final “flush out” which would allow a selling exhaustion and capitulation.”
My suspicion was confirmed by the price action.
Yesterday it was a different down day, for the first time since the down leg off the May 1 is in force we saw indications of fear although I am not sure that we have seen the final “flush out” that usually occurs at market bottoms.
btw I wanted to make an aside : when I refer to a market bottom I don?t mean that price has completed an EWP, for the time being only a low that could open the door to a multiday rebound.
We can detect fear by looking at the VIX chart, since it finally confirmed the Inverted Head & Shoulder which has a theoretical target at 28.50
Regarding if yesterday was the final capitulation I have serious doubts since:
- In my opinion the EWP from SPX last lower high on May 11 is not completed yet. Remember that we need a 5 -wave decline and so far in my opinion price is still embarked in the wave (3)
- We did not get a 90% down day, a surge in selling volume that usually occurs when price is on the verge of establishing a bottom. In the chart below you can see the larger selling pressure occurred on the October 4 bottom.
