1/ Mini tutorial from Dragons's Den. Nested waves - corrective flat
2/ Conventional EW states that the market will nest in 5 wave patterns, meaning 5 up and 3 down. I have iterated many times that this is complete garbage and ultimately will ALWAYS fail. In reality, the market nests in a more complex pattern called a corrective flat.
3/ This is equivalent to the classic 3 peaks and domed house pattern originally described by George Lindsay. Read up on it. 
4/ The A wave can actually be quite variable and if sharp, it turns it into an ABC zigzag, basically another variation of the flat. Just think of the end of the A and B parts as "hinges" that can pivot and depending on how they pivot, it can results in "running" corrections.
5/ In the most classic form though, the A wave of a corrective flat can ALSO be a corrective flat and thus, begins the nesting. Within the B wave, commonly an ABC-X-ABC pattern overall, the B waves typically alternate with 1 being a flat and the other a zigzag.
6/ The X wave can take on any format but all are a variation of the flat....another flat, zigzag or even running.
7/ 5 wave impulses do exist, but are merely segments within this pattern and usually found most commonly within the A and C of the ABC-X-ABC B wave or as the A and C of a zigzag. Impulses will ALWAYS channel tho. Period. If it does not, it is NOT an impulse.
8/ Most patterns in the market are in fact, 3 wave structures and this is the #1 reason why conventional EW fails. Many will break the rules to "fit" 5 waves when it is really not correct to do so. Impulses are HIGHLY emotional, hence why they move straight into a channel.
9/ In order to present true structure, you need mass emotion. Thus, more volume = better patterns. Hence stocks not quite as good as indices but even the latter, you must be careful as "crowds" can be biased.
10/ The NDX for example is a highly speculative group. The RUT is small cap and also prone to distortion. The S&P and DOW though are widely held across spectrum and more representative of mass emotion across the board. Still some stocks can exhibit this behavior.
11/ Home Depot, HD, is an excellent example of a mass emotion stock exhibiting classic nested corrective flat behavior.
12/ HD chart. Daily and weekly. Note on daily the classic 3 peaks (corrective flat pattern) developing since Jan 2018. This is exactly the same as S&P. Note the zigzags and nested flats within the pattern. Indicators like stoch and MACD will often correlate
13/ In fact, you can see the nesting by going out to weekly. Pattern from 2009 is EXACTLY same structure as pattern from Dec 2018 (B wave of flat). Here, the X wave of the big B takes running format, ie, the "hinges" pivot this segment in the same direction as the whole pattern.
14/ While not all stocks are "emotional" enough to follow this clean, many do. Hence the prediction that a significant "C" wave down to S&P 2650 is about to commence. Stocks like HD will participate. It completes the "c" wave of the last c in the abc-x-abc pattern from 2009.
15/ Will advise 1) stop using conventional EW, 5 up 3 down, and 2) look for those corrective flat, aka 3 peaks patterns. These things will offer the most promising rewards as it is the TRUE nature of market behavior.
16/ Will also advise that if you have ANY scientific background, you already know, theories need to be backed up by data. proof. Reasons why something is true. Conventional EW has absolutely NONE of this. You cannot base a theory on guesswork.
