Todays stock market action most likely indicates that for those who follow Elliott Wave theory, wave 3 of 5 has now started its leg down in the current bear market. Wave 3 is usually the longest wave and will be longer than wave 1 and 5 when this minor 5 wave sequence is completed. The current 5 wave sequence is minor and when complete will be a wave (1) of higher degree. Then there is a 3 wave a-b-c bear market rally wave (2) and then the real bear market killer wave (3) starts its downward leg. If this bear market plays out following Elliott Wave theory then there should be a final bear market bottom sometime in the next 6-12 months. Today was a good day to have hedges SDS (2X short the SP500) and EUO (2X short the Euro) in place.
The following chart is from today's Elliott Wave Financial Forecast special update.
Click to enlarge.
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