Stock Market Panic Scenario Developing
Stock-Markets / Financial Crash Oct 02, 2012 - 10:05 AM GMTGood Morning!
The Scenario that I discussed last night is playing out. Remember, this formation is comprised of zigzags, or a-b-c waves. This morning’s pop is a B wave. We will have confirmation of that once SPX declines below 1440.98.
This decline will be the wake-up call, but many will fall back asleep when a strong 61.8% retracement from the 50-day moving average (1413.99) back to mid-cycle resistance at 1450.45 follows.
Please note the newest Broadening Wedge formation in the SPX. It has a trigger at 1440.00, so the odds are good that the crash may even start at 1440.00! Nevertheless, I still expect the bounce from the 50-day before that takes place before the panic scenario goes full force.
The VIX may be revealing a Leading Diagonal, which is a wave [i] of a new impulse going higher. It is uncertain whether the retracement of the Leading Diagonal is complete or not, but the move in SPX to 1413.99 should be accompanied by a sudden surge in the VIX.
Regards,
Tony
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