I first mentioned the possible fractals in the VIX-Index in early August (See the link below)
http://theelliottwavesufer.blogspot.com/2011/08/s-500-time-to-take-breather.html
It has since developed in accordance to the "Child fractal" and we could well have seen point "g" ending at the extrem fear level yesterday. If this is correct we should now see a more protracted decline in the VIX-Index. I would expect that we could see a move back towards the yellow line seperating "Unease" with "indifference", before beginning the next rally.
Looking at the concequences for the S&P 500 the most obviouse solutiong will be, that we have just seen the low of wave 1 of [C] down and has are in the very early stages of wave 2, which should take us back up to the 50% retracement target of wave 1 at 1,223.57 just below the top of wave iv of one lessor degree.If this is the correct count we should see a break above 1,138.51 and more importantly 1,160 soon to confirm the move towards 1,223.57.
That would kill my possible shoulder/head/shoulder top (see my post from yesterday here:
http://theelliottwavesufer.blogspot.com/2011/10/banks-confirm-next-leg-lower-in-s-500.html ), But we could well be building a bigger Shoulder/Head/Shoulder top, with the neck-line at 1,080. Only time will tell which is rigth.
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