Bearish Set-ups – VIX Rise – Nasdaq Sell-off
Bearish momentum may not be over for US Indices, as the VIX is showing a realistic possibility of an extension and a continuation of its rise.
A breach scenario could confirm more down-side for the US Indices and a big bearish wave as a potential outcome.
US Indices have been going through some tough times for the past two months. It may not be over!
October kicked off with a hug sell-off in stocks and indices world-wide, thus implementing risk-off sentiment or even the “fear” effect caused by a sudden spike in volatility.
This possibility has been explained gradually and multiple times, either with the “VIX Spike & FED Trigger – October Trends” article or with the “Volatility in 2018-2019 & The Financial Earthquake” article.
November is coming to an end and the main question is: is the bull-market returning or are the bears just getting started?
Technically speaking, Dow Jones, SNP500 and Nasdaq100 are all sitting “at the edge of the cliff”. In other words, stock exchanges would need to bounce and perform an impressive come-back if investors were to snap out of it and regain their buying stance.
But! There are a few factors which are not to be neglected by a calculated mind.
At these very moments, US Indices are either resting on crucial trend-lines or entering a dangerous territory.
* This article contains delicate information and should not be treated as investment advice or as a solicitation the trade. Risk must be considered.
US Indices – Elliott Wave Counts
Volatility Index (VIX) – 2H Chart (picture)
VIX could be continuing the recently witnessed spike in “red October”. If this would materialize, then this could lead global indices in an even more aggressive sell-off, thus continuing the bearish cycle.
- Structure: Flat pattern in Intermediate (A)(B)(C) (orange) degrees.
- Sequence / Labels: Impulsive bullish sequence with a probability of an extension in the 3rd sub-wave of a larger degree 3rd main wave.
Volatility Index (VIX) – 2H Interactive Chart
DOW JONES – Bearish Analysis
US30 – Daily Chart (picture)
US30 – Daily Interactive Chart
Dow Jones is currently retesting a significant trend-line on which it previously gained support, leading towards bullish outcomes. A breach of this trend-line could drastically implement a bearish sequence.
- Breach scenario: Double Three pattern within an Expanding Flat, which could result in a bearish impulse.
- Support scenario: Running Flat structure, which could result in a bullish impulse and a possible bull-market resumption.
US30 – 4H Chart (picture)
US30 – 4H Interactive Chart
SNP500 – Bearish Analysis
SPX500 – Daily Chart (picture)
SPX500 – Daily Interactive Chart
SNP500 is also retesting a very important trend-line, one which previously resulted in bullish swings. A breach of this trend-line could lead towards a “devastating” scenario, in the sense that the bearish momentum could increase rapidly and with continuity.
- Breach scenario: Double Three pattern within an Expanding Flat, which could result in a bearish impulse.
- Support scenario: Running Flat structure, which could result in a bullish impulse and a possible bull-market resumption.
SPX500 – 4H Chart (picture)
SPX500 – 4H Interactive Chart
NASDAQ 100 – Bearish Analysis
NAS100 – Daily Chart (picture)
NAS100 – Daily Interactive Chart
NAS100 – 4H Chart (picture)
NAS100 – 4H Interactive Chart
Nasdaq100 does not match the above-mentioned US Indices, in fact the structure points towards a breach as a possibility, as the strong support and trend-line has been breached already.
In a bearish scenario, NAS100 could retest the previously broken trend-line and would face a “challenging” resistance.
- August 2018 – November 2018 wave count:
– Bearish sequence, with a sharp correction in Intermediate (A) (red) and a Running Flat in Intermediate (B) (red). - Intermediate (C) (red) could be sustained, with bearish volumes on its side, and a sell-off continuation could send NAS100 towards grounds even lower than the ones seen back in February 2018.
* This article should not be treated as investment advice or as a solicitation the trade. It should be treated as market commentary and risks should be considered.
