One way we can count this supremely bearishly is like this:
The problem with this count is that I see no fib relationship between red “a” and red “c.” So I am suspicious of doing this.
The other way is to count it as a “nest,” like this:
I have discussed this before, and this is not ideal either. It’s a lot of overlap. It would be better if the red 1-2 were deeper—entirely below the orange 1-2 if possible. If we’re in a motive wave down, we should be moving down. It’s a possibility. But usually, as we’re winding up for a crashy thing, somebody out there knows something, and I would have expected the $VIX to squeeze into the close. But it’s done just the opposite and has given us that head and shoulders (here) instead.
The bullish way to count it is maybe like this:
In this case, we hit that golden 1:1 long-term fib at 3621 this morning, dipped below it by only about 10 points this afternoon, and that can be close enough given the timeframe involved. (It would be a very small red “2” up there though.)
As mentioned earlier, given the $VIX, given the recapture of the June low, I took even more puts off, added more calls, and I bought some of the calls I sold this morning back. It is possible that we rally here, though I can’t rule out a big dump, either, though probabilities seem shifted toward the bulls during the course of the day, in my opinion.
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