profit downgrades to come, page-20

I know that Elliott wave is not popular here, but I would just like to share my thoughts on this:

Elliott wave has predicted many markets in the past, and 10 years prior to 1987, when the book by Charles Collins was written, he had a last section in the book with his "prediction". Obviously this was prefaced with the fact that predictions that far in advanced were difficult blah blah blah...Anyway, he accurately picked the turning point of 1987.

Pretty good I'd say.

As for where the current pattern fits: the market action as of late isn't just a 3rd attempt break to further upside, but what I would consider an ending diagnoal pattern.

An ending diagonal is a special type of wave that occurs primarily in the 5th wave position at times when the preceding move has gone "too far too fast". In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.

What happens is that the 5th wave of a diagonal triangle has a brief break of the trendline connecting the points of 1 and 3, on lower volume. The pattern always ends with a spike of relatively high volume when this occurs. A rising diagonal is bearish and is usually followed by a sharp decline retracing at least back to the level where it began.

5th wave extension and diagonal triangles all imply the same thing: Dramatic Reversal ahead.

So by my calculations, the retracement should be back to about the 6200 level on the xao.


Something to think about.