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Wednesday, April 11, 2012

Elliot Waves applied on cracks in S&P 500 charts - Is this the end of US Bull?

Elliott Wave is a esoteric branch of technical analysis. Not to say that it didn't see its glory days. The theory was developed by R.N. Elliott and taken to its pinnacle by Doom Guru Robert Prechter. Using Elliott waves, Doom gurus have correctly predicted 15 of last 5 market downturns!

Today is our moment in the sun to predict one more downturn when we apply basics of Elliott Wave to S&P500 which has suddenly started cracking up. Pls look at the S&P 5 year chart below:

Elliott Wave works on the simplistic assumption of basic 5 Wave impulse and 3 Wave corrective sequence. In the chart above we have tried to chart a 5 wave impulse on the Bull run in American bourse since Apr 2009, which is now showing the pattern of completing 5 Wave impulse and hence the start of formation of 3 Wave corrective action.

There are couple of surprise elements in above para. First of all, its a news for lot of people that Bull Wave was continuing all this time since 2009. In the wake of tremendous bad news globally, lot of markets have cracked, but S&P 500 has seen new high recently to 1400 levels and hence completed its step 5 of Elliott Wave.

The 3 Wave corrective formation might take S&P 500 to 1000 odd levels and which will pave way for a completely new Bull markets to newer heights. Remember, all destruction creates path for a new day, new glory and a whole new world!

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