Potential Flash Crash - SPX Reveals its Pattern

By: Anthony_Cherniawski

To the left is a more complete explanation of what I had illustrated last night. That suggests Minor Wave 3 of Intermediate Wave (3) may be underway.

Granted, the Pre-market shows a possible probe above 1873.49, but I think the algos are keeping the market in line for the harvest of the index options at the open. The SPX may let go at the open for an approximate 63 point plunge. I am basing that projection on the wave relationship where Wave 3 of (1) is 2.625 times the size of Wave 1 of(1)…

There is a potential that Intermediate Wave (2) may not yet be complete. However, that does not negate what may happen afterwards.

…That plunge would trigger the Broadening Wedge and break through the 50-day moving average at 1831.56, landing or piercing the lower trendline of the Ending Diagonal trendline.

If this were to happen today, the markets may easily be in a Flash Crash that could last through Tuesday or Wednesday next week. Ten days have passed since the top was put in on March 7. Granted, there isn’t much downside progress, but neither have the prior flash crashes made much progress until the final 4 days. The 2010 Flash Crash was 10.75 days long. The 2011 Flash Crash was 12.9 days long. This on may be 12.9 market days (Tuesday), 15.05 days long (Thursday) or 17.2 days long (Monday, March 31).

It has the potential of being much larger than the prior two Flash Crashes.

Meanwhile, we await the outcome at the open of the market.

Regards,

Tony

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