Imo, the key to the intermediate term Elliott analysis of the markets is that the major indices recently made a new high - taking out April highs. This confirms that the April - July decline was all or part of a correction. The advance since July low (so far) looks like a three-wave structure - it could be Wave B of an evolving Expanded Flat since the April top (with a C down pending). However, it may happen that the latest last week's decline will prove to be no more than a short term correction (W4) -- in that case the rally since July may yet morph into an impulse (which may be the matching Wave C of the larger advance since March 2009).
If we go down now and test the lows of last Summer - and then rally -- that would suggest another Bull market which should last for at least several months. And, paradoxically, if we only correct now and then make new highs, that could be potentially far more bearish.
The good thing about EW is that they offer a road map. The bad thing is - that road map can be very messy - moves can "fail", or to the contrary, they may "extend"... and so forth. Prechter made a great call at the top in 2007 - and (imo) a far greater call near the bottom in 2009, to cover - but he did not go long, and started shorting again too early. |
