Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
South Korea Coronavirus Outbreak Data Analysis Warning Rate of Infection is Exponential! - 26th Feb 20
Gold Price Long-term Trend Analysis Forecast 2020 - 26th Feb 20
Fake Markets Are on Collision Course with Reality - 26th Feb 20
Microsoft is Crushing the S&P 500, Secret Trait Of Stocks That Soar 1,000%+ - 26th Feb 20
Europe's Best Ski Resorts For The Ultimate Adventure - 26th Feb 20
Samsung Galaxy S20+ vs Galaxy S10+ Which One to Buy? - 26th Feb 20
Gold Is Taking on $1,700 amid Rising Coronavirus Fears - 26th Feb 20
Is This What Falling Through the Floor Looks Like in Stocks? - 26th Feb 20
Gold Minsky Moment Coming - 26th Feb 20
Why Every Student Should Study Economics - 26th Feb 20
Stock Market Correction Over? - 26th Feb 20
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Why the Stock Market Rallied So Fast

Stock-Markets / Stock Markets 2019 Apr 30, 2019 - 04:46 PM GMT

By: Brad_Gudgeon

Stock-Markets

Most market analysts didn’t expect the stock market to recover so fast, but if you knew how Elliott Wave works, you could have anticipated the current move.

  • What’s Next for the Stock Market
  • Understanding the Bigger Picture
  • E-Waves and Cycles

In this segment, I will be looking at the S&P 500 from the perspective of 20-years 1999- 2019.

The basic premise behind the Elliott Wave Theory is that markets move up in 5 waves and down in 3 waves, completing a perfect octave (like music). R.N. Elliott (ca. 1920’s-40’s) was able to see the Fibonacci sequences that are found in nature (e.g. the spiral of galaxies, seashells and the inner ear) and apply them to waves of mass greed and fear in collective human buying and selling activity.

The top in late January 2018 to the bottom in December 2018 was a three wave buying pattern I call X-Y-Z (an a-b-c or 3 wave pattern).  Elliott noted that these patterns are very bullish once completed and launch markets to higher highs.  This is where we are now.

True bull waves always move in 5 waves (1 up, 2 down, 3 up, 4 down, 5 up).  The last such bull wave lasted from 1974-99, which I have labeled (in the chart below) as Super Cycle Wave III. After 1999, the S&P 500 completed an XYZ wave in March 2009, which I labeled as a larger Wave X.

What is surprising (given the magnitude of the launch), is that the wave up from the 2009 low to now (April 2019) does not have any true 5 wave sequences in the impulse waves.  It is a double 3 wave affair (ABC X A now B with C to come or a Double Three Pattern).  This can happen only if Wave Y is an irregular topping wave.  For this wave to have gone this far up (and looking to go higher in the next 2-3 years) means to me that it is likely what Elliott termed a “rare” Running Correction pattern since 1999.

A Running Correction basically exceeds the previous top (SPX 1552 Wave III-1575 Wave Y of [X]) by the same percentage amount it fell below the top (Wave Z of [X] 2009) completing Wave [Y] and then falls back to test that area in Wave [Z].  Wave [Z] then completes Super Cycle Wave IV, launching the final Super Cycle Wave V.

One of Elliott’s Rules was called the “Rule of Alternation”, that is if Wave 2 was simple, Wave 4 would be complex and vice versa. Wave 2 and 4 could never be the same pattern, no matter what.  Wave 2 (1966-74) was a simple expanding flat (x-y-z [X], a-b-c [Y] and a-b-c [Z]) lasting some 8-9 years (same as [X] of SC Wave IV 1999/2000-2009).

The problem is: the sideways x-y-z pattern of 1999-2009 was too similar to the “1966-74 wave pattern”. This makes Wave IV the complex wave pattern in the sequence. The fact that Wave Y of IV has gone this high and looks to be going higher in the years to come, goes beyond the scope of a normal irregular top (like the one we are now since December 2018, Wave Y of “B”, see chart below).

Normally, in past 80-90 year cycles, we have seen huge sell-offs (e.g., 1929-32 down 89%, the deflationary bear market of the 1840-1850’s, and the British Panic of 1772). Each one of these depression sell-offs have occurred right before major wars (e.g., American Revolution, American Civil War, WWII).

Every 83-84 years, Uranus enters into Taurus for 8-9 years.  These periods have been marked in history by social revolutions, economic depressions, technological innovations; currency, banking and agricultural changes.  Our current period 2018-26 is one such period.

There are a lot of forecasters that are forecasting doom and gloom in the next few years. In fact, there are too many of them.  As a contrarian, this concerns me, as I used to be in that camp. Based on Elliot Wave and my cycle work, I think the worst we see is a repeat of 2007-09 by 2024. I see a lot of market pundits touting silver and gold as hedge against the coming calamity.  My methods tell me different: we are in a continuing bear market in precious metals like gold and silver until 2023 (more on this sector at another time).

Getting back to the stock market, I see a nice pull back in May called Wave “b” of Y associated with the 20 week cycle before we go much higher into July of this year (S&P 500 3170?). As I write this article (April 26, 2019), I see at least one more move higher into April 29th, probably above 2960, before the market corrects in Wave “b”.

Next week, I’ll be writing about the wave structure from Dec 26- April 29 and what we might see in May on the downside before the market resumes higher into July.

4_25_19_spx_monthly.png

Brad Gudgeon
Editor of The BluStar Market Timer

www.blustarmarkettimer.info

The BluStar Market Timer was rated #1 in the world by Timer Trac in 2014, competing with over 1600 market timers. This occurred despite what the author considered a very difficult year for him. Brad Gudgeon, editor and author of the BluStar Market Timer, is a market veteran of over 30 years. The website is www.blustarmarkettimer.info To view the details more clearly, you may visit our free chart look atwww.blustarmarkettimer.com

Copyright 2019, BluStar Market Timer.  All rights reserved.
Disclaimer:  The above information is not intended as investment advice.  Market timers can and do make mistakes.  The above analysis is believed to be reliable, but we cannot be responsible for losses should they occur as a result of using this information.  This article is intended for educational purposes only. Past performance is never a guarantee of future performance.

Brad Gudgeon Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules