User 273178

Reading the S&P 500's Crashing Waves

The wave count here is the most bearish possible. Other wave counts are possible. For example, it is possible this is an ABC from the top in Oct. (WXY from the prior top, we would be in wave Y, or another variation), and that we are mostly through it. In the ABC scenario, we would be in 3 of 3 of C of Y. Wave 4 would be a strong bounce, and in this case, Wave 5 might be considered a failure. A failure is when wave 5 does not go below the wave 3 lows. This occurs when the prior wave goes too far, too fast, and that certainly seems to be the case here.
In 1987 for example, that is considered by most to be a 3-3-5 correction. In other words, the new high was part of a B wave correction (3 subwaves), and then the C wave was 5 waves down. However, the wave 3 low that was the crash, was never broken by wave 5. After that crash low, a triangle pattern is traced out, which is common for wave 4's. The wave 5 after that held well above the wave 3 lows, and you can see that wave 5 subdivided further into 5 waves.

So, from an Elliott Wave perspective, the bear market probably isn't over even if we put in a good bottom here. But, from a price standpoint, that doesn't necessarily have to agree.