The big Elliott Wave bear market pattern that started when the S&P 500 index topped at 2134 back in May 2015 is now coming to an end. Not the bear market, but the current down pattern.
When we get close to a big pattern coming to an end, we usually see the biggest up and down moves with the most momentum. The pattern I have been following consists of 9 waves down, by 3 waves up, and finally another 9 waves down. You could also say it's a big A/B/C.
When the big (A) completed back at the end of August 2015 and during the processing of the 9th wave, the market went down for a whole week (5 mkt days) without taking a break for even a small counter trend rally. The result was about -233 points on the S&P 500 and during the morning of the last day and the end of the 9th wave, the Dow dropped 1,000 points. It recovered and lost 500+ at the close. That was the end of the big (A) wave.
Then we had a big A/B/C rally that lasted to the beginning of November. That was a strong counter trend rally that took the S&P 500 all the way back up to 2116. That finished the big (B) Wave.
When we topped at 2116, we also "reversed" and started the big (C) wave down. The end of the big (C) wave will be the completion of the whole pattern and we have processed 6 waves so far and are currently working on wave-7 down.
If you look at a S&P 500 daily chart, you will see that the last wave-5 down went from 2081 down to 1812 and that was -369 points. That was stronger down than the 9th wave of the (A) wave by 136 points.
Also recently our last wave-6 up was "very" weak and only retraced 135 points back up to 1947 level.
Now the "scary" part of this article. We have just started our new wave-7 down last Monday 2/1/16 and I believe that the current wave-7 down will be stronger down than the last wave-5 down. I also believe that the final wave-9 down will be stronger that the wave-7 down. So when it's all said and done, where does that leave us on the S&P 500 index. I am thinking near 1725 just to complete wave-7 down, and we still have wave-9 down, before this big pattern is completed. So I am thinking somewhere below 1725.
Happy Trading