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Sunday, May 21, 2017 9:45:30 AM
Amateur Investors: Weekend Analysis
* May 20, 2017
As I mentioned in the middle of the week the VIX rose 46% on Wednesday which was the 6th largest % daily gain since 1990. Meanwhile the S&P 500 rallied both Thursday and Friday after falling 1.8% on Wednesday.
The only other time the S&P 500 rallied two days in a row after the VIX rose more than 45% in one day was back in late July of 1990 (point A). Back then this evolved into a larger correction as the S&P 500 dropped nearly 20% by October of that year.
If a similar outcome were to occur with the most recent event, that would be a 480 point drop from the recent high just above 2400. Looking at the wave structure from the early 2016 low, a 20% correction doesn't seem likely unless the final 5th Wave ended at the recent high of 2406. Although it's not impossible that the last wave ended up being much smaller than anyone expected, I wouldn't favor it at this point unless the S&P 500 breaks solidly below its upward trend line (black line).
Meanwhile a more likely possibility is that we are still seeing a 4th Wave which is evolving into a complex "abc" affair. In this scenario "c" would bottom near the 2300 level or slightly below it to complete the 4th Wave. This would then be followed by one more move higher to complete a 5 Wave affair from the early 2016 low.
http://www.amateur-investors.com/AII_Weekend_AnalysisMay_20_17.htm
• DiscoverGold
Click on "In reply to", for Authors past commentaries
* May 20, 2017
As I mentioned in the middle of the week the VIX rose 46% on Wednesday which was the 6th largest % daily gain since 1990. Meanwhile the S&P 500 rallied both Thursday and Friday after falling 1.8% on Wednesday.
The only other time the S&P 500 rallied two days in a row after the VIX rose more than 45% in one day was back in late July of 1990 (point A). Back then this evolved into a larger correction as the S&P 500 dropped nearly 20% by October of that year.
If a similar outcome were to occur with the most recent event, that would be a 480 point drop from the recent high just above 2400. Looking at the wave structure from the early 2016 low, a 20% correction doesn't seem likely unless the final 5th Wave ended at the recent high of 2406. Although it's not impossible that the last wave ended up being much smaller than anyone expected, I wouldn't favor it at this point unless the S&P 500 breaks solidly below its upward trend line (black line).
Meanwhile a more likely possibility is that we are still seeing a 4th Wave which is evolving into a complex "abc" affair. In this scenario "c" would bottom near the 2300 level or slightly below it to complete the 4th Wave. This would then be followed by one more move higher to complete a 5 Wave affair from the early 2016 low.
http://www.amateur-investors.com/AII_Weekend_AnalysisMay_20_17.htm
• DiscoverGold
Click on "In reply to", for Authors past commentaries
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
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