SPY & VCP | Ultimate Proof
The ultimate proof that this market has been in compression not distribution comes from the Volatility Compression Pattern (VCP) concept which maps correctly to my thermodynamic engine model. See picture.
VCP requires :
Price Contraction: Each corrective leg is smaller than the prior one, respecting rising support, and failing to break prior swing low. This matches my 3 shockwaves shown in the picture; halving of drops: 38, 18, and 9
VIX Contraction: This has been clear since the macro top on 10/29 with the most recent vix collapse self-evident with the SVIX rise for 40 days since shockwave 2 on 11/20
Volume contraction: with clean fast buying at each of the price drops, confirming accumulation, not distribution.
We are witnessing Compression (building a springboard) before expansion on 01/12/26 at top of this perfect triangle which will complete Elliott Wave 4 consolidation period.
This means you have the entire Wave 5 left in front of you which is an aggressive leg that will lead to this cycle top > $723
What will happen this week with price action is immaterial, the expansion is confirmed, we cannot stay in fear because of a 1-day reset, or you will miss the entire wave 5 leg. You can ignore the vaxtro opportunity and just plan on going long from 01/12/26 into at least 02/12/26, 30 days of profits. If the market does not resolve the VIX3M/VIX30D ratio by force on Friday, it will find a way to resolve it slowly as it runs the engine with the Overheating sign on the instrument panel. More relevant info discussed on this ratio earlier this week.
Please validate: Here are the exact daily swing‑low levels for SPY in the same VCP sequence:
SW2 (prior swing low): $650.85 on Nov 21, 2025 (daily low)
SW3 (last contraction low): $671.20 on Dec 17, 2025 (daily low)
Quick use: pattern integrity holds while price stays above $650.85 (SW2); post‑breakout protection is typically set just below $671.20 (SW3).
Supreme Court tariff decision on Friday