Elliott Wave Stock Market Update - August 21

Finally some excitement in the market! After being stuck in the 2040-2134 range for most of the year, support broke yesterday and selling accelerated as I had expected. I heard on the radio today was the worst day for the DJIA in 4 years, which puts into perspective just how much the market has gone up since the low in 2011. All this time the market had respected key trend support but that level broke today and this confirms the top of LT W3 label on the long term chart. I remember when I first started to project the LT count the targets seemed too high but all the waves completed without a single exception and targets proved accurate (give or take a few percentages). Come to think about it, it's actually amazing a market can follow patterns for a period of years. The last time the LT chart was updated was in December and I'll do the Fib retracement labels early next week to bring it up to date.

Now that the top in May is confirmed, we should be looking for a bottom for the correction. I mentioned a few days ago the 1820-1900 area looked like an attractive target and today that possibility looks very feasible. The short term count looks to me like it's not over, so I am assuming there will be a bounce before another lower low. As it is, the market closed right at support and if this level doesn't hold on the next bearish wave, the next level is 1905. Obviously, it's hard to tell when the bottom will happen but I suspect when the foaming-at-the-mouth permabears get paraded by the media, that will be around the time the bottom will be in. Similar to the case with China right now, while more downside is possible in China, there's a good chance a bottom is getting close with all the "expert" doomers all over the place. So be on the look out for the likes of Marc Faber, Prechter with his DOW 1000, Harry Dent, etc.


For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit http://www.ewaveanalytics.com


Short Term Trend = Bearish
Medium Term Trend = Bearish

Long Term Trend = Bullish trend being challenged - change imminent

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.