An OEW Bull Market Analysis/Projection

We report every weekend, in the long term section, the current count and what wave pattern we see going forward. However, we understand that words are sometimes difficult to interpret, while pictures provide more information, so we offer the following chart.

If we treat the current bull market, and previous bull market, as Cycle waves, we can make some direct comparisons. These comparisons might offer an investor a better idea of what to expect going forward, while, it would appear, the point of recognition for this bull market has arrived. Nearly everyone, investors and amateurs alike, seem to be on board and reaching some sort of euphoric state of riding the “free money train”. Unfortunately, this usually occurs during the tail end of a bull market, and not in its early or even middle stages.

From an Elliott Wave, and specifically OEW, viewpoint, this usually occurs during Intermediate iii, of Major 3, of Primary III. Or, the third of the third of the third wave, of a five wave bull market. Now to the chart.

When we remove all the subdivisions within the Major waves, we are left with an easier wave pattern to observe. Five Major waves within Primary waves I and III, then a simple Primary wave V to end the 2002-2007 bull market. Notice, Primary I took a bit over two years, Primary III about two years, but Primary V was only two months. Also note, the DOW broke through its all time 2000 high in Major 3 of Primary III, about one year before the bull market ended. The main reason, other than the wave structure, for the point of recognition. Technically, the monthly RSI hit its highest level, of the entire bull market, during Major 3 of Primary III. Finally, after the breakout to new highs the DOW then gained an additional 21% before topping out in October 2007.


The comparisons between the 2002-2007 bull market and the 2009-2013 bull market are quite striking. In our current bull market Primary I took a little over two years, and Primary III is in its second year. The DOW recently broke through its all time 2007 high also in Major 3 of Primary III. Technically, the monthly RSI has also reached its most overbought condition, of the entire bull market, during Major wave 3.

With all this comparative data in mind we could project the following. The bull market should end about one year after the Mar13 breakout to all time news highs. The DOW should also reach 17,000, about 20% over the previous all time high. This analysis, oddly enough, compares with the projections we have been making for the SPX. A bull market top in late winter-early spring of 2014 between SPX 1650 and 1780. Two different views, same results.