I don’t think I have any regular readers who are interested in market analysis based on the Elliott Wave Principle. But I do think I am read for what the analysis implies. The new high on the Dow Jones Industrial Average changes the count, but not the expectation of a whopping bear market. Here’s a look at the count that most satisfies me now (one of several that Prechter identified in his most recent letter):
Elliott Waves have personalities that reflect the social mood of that period. I like this count because the B wave does just that. Here’s what Frost and Prechter’s The Elliott Wave Principle says:
B waves are phonies. They are sucker plays, bull traps, speculators’ paradise…If the analyst can say to himself “There is something wrong with this market,” chances are it’s a B wave…
Is there any doubt in a rational person’s mind that, given the deteriorating fundamental picture, there really is something wrong with this rally? I don’t think there is any doubt at all. If this is so, there remains the C wave to come to complete the bear market. Here’s the comment on C waves:
Declining C waves are usually devastating their destruction…It is during these declines that there is virtually no place to hide except cash. The illusions held during waves A and B tend to evaporate and fear takes over…
That is how I expect the next phase of decline to play out, and the long term target is still around 400 on the Dow Jones Industrial Average.
No time to be complacent.
No one should consider any part of this presentation as a recommendation to buy or sell any securities whatsoever.