some thoughts on theory... for elliot practitioners

1. IF... say SPX lost 50% in 1 day... would the 2X leveraged fund SSO go to zero?

2. A caveat of Elliot's wave structure (5 up 3 down) is that the market can't go to zero, correct? (a teaparty post reminded me of this)

3. IF... say SPX gained 50% in 1 day... would the 2X inverse leveraged fund SDS go to zero?

my undergrad degree was actually in physics (not architecture), so i was formed around Einstein's thought experiments... hence the origin of the post. This is a serious question... so please do reply. thanks in advance. -TA

I've never seen a stock go to zero. They usually go to some fraction, like 0.1 or 00.1, i.e., they become penny stocks. I wonder if ewave would work if SPX became a penny stock.

easy to see if you look at the prospectus and positions. that has absolutely nothing at all to do with elliott wave structure, that i can see.

Yes, the 2x ETF could go to zero. That's why it's crucial to base e-wave analysis ONLY on the underlying index, in this case, SPX. This does not conflict with the basics of e-wave theory since the originators insisted that the counts only be applied to widely-traded, massive volume indices and markets and discouraged other applications, such as to individual stocks. I'm sure they would have discouraged applying it to 2x ETF's had those vehicles been available back in the day.

since the originators insisted that the counts only be applied to widely-traded, massive volume indices and markets and discouraged other applications, such as to individual stocks.

that answers my question... thanks john.