I really hope my colleague David Waggoner is wrong but so far his Elliott Wave mapping of the stock market has been spot on. Here is an excerpt from his current report sent to his subscribers at The Market Detective.
What I hope you can see, and you might need to click on the chart to blow it up to a more readable size, is a Wave 4 triangle in a bear market trend. Holy #$%^ Michael, speak English.
Elliott Wave theory says that primary trends move in 5 waves. A corrective trend moves in 3 waves. The primary trend now is down so there should be 5 of them - three down and two corrective. I am not going to get into an argument over whether the current bear is a 3-wave of 5-wave affair but Elliotticians say that in either case a corrective wave against the trend comes between two waves in the direction of the trend.
The pattern seen in the chart is a triangle pattern and accordingly that would be a correction in an ongoing bear market. In other words, there is more downside ahead.
Fortunately, this analysis give us one more little rally before the day of reckoning.
Do I believe this? I won't say here or my subscribers would have a cow. But if this pattern does break down it would not be a good thing.