As expected, the SP500 turned down for a deeper correction back to 5k area, as drop on all major indexes and some big cap names were pretty aggressive. However, there was a huge spike in VIX, so there must have been a lot of fear involved, which after initial selling shows extreme pessimism and that's when the market tends to stabilize, when least expected. Well, we have seen some stabilization through most of the second part of August, but notice that the index did nmot reach new highs; it's pulling back down now after moving up to 5670 area, from the start of the month.

(Click on image to enlarge)

So looks like the correction from July is going to be more complex and longer in time, maybe even deeper in price. We are observing a fourth wave here, which can be a triangle or flat as both, waves (A) and (B) unfolded in three waves. The important should be the 5300 area; if it holds and the market makes only three legs down from wave (B) swing high, then the triangle is on the table. On the other hand; if there is an aggressive selling through 5300 and lower, and the drop start looking impulsive, then it can be part of a flat.

In either case, it's important to realize that correction is ongoing and most likely incomplete.

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