In recent years Europe has been a major focus of financial media. Europe has experienced much more difficulty than the U.S. emerging from the global financial crisis, with many European economies being in-and-out of recession ever since 2008. An interesting observation is that, despite the economic stagnation, most European stock indices have been rising. The bull markets have been more subdued than the U.S., but what this suggests to me is that European stocks are still in the early phases of a very long bull market, with more years of upside left than the U.S.

First, here’s the U.K.’s FTSE-100 index:

FTSE long term Elliott Wave

It looks like the FTSE had a large-scale bear market during 2000-2009 which took the form of a flat, and a new bull market started from the 2009 low. Even though the 2003 low was never broken nominally, the inflation-adjusted FTSE did go below its 2003 low in 2009, which is why I have labeled 2009 as the bear market low.  The first Primary wave of the new bull market was from March 2009 to April 2010. Then there was an expanded flat Primary Wave 2 during Apr. 2010 – Aug. 2011. Primary Wave 3 began from the Aug. 2011 low. Even though the rally since then has been long enough time-wise to qualify as a primary wave, the index isn’t far above its 2010/2011 highs yet. Thus, I think this third wave will turn out to be an extended third wave, in which each of the five subwaves are the magnitude of primary waves. This is a well-known phenomenon in Elliott Wave theory, and more detail about it can be found here. For the FTSE, I think the first leg of the extended wave will conclude within a few months followed by a correction of 20-30%,  similar to the 2011 drop. Support will likely be found around the July 2012 low at 5200. After that, a very strong advance should begin in the FTSE.

Next, I have the chart of France’s CAC-40 index:

CAC-40 long term elliott wave

It’s basically the same pattern as the FTSE.

Germany’s DAX index shows a different pattern:

DAX long term Elliott Wave

The DAX appears to be in a large-scale bull market, with highest-order subwaves more like Cycle degree than Primary degree. I think this was also the case for the U.S. bull market of 1982-2000.  The DAX appears to be in Cycle Wave 3 of a bull market that began in 2003. Within this wave, the DAX is probably near the top of Primary Wave 3. After a Primary 4 drop, the DAX should rise for at least two more years to complete Cycle 3. I should note that I diverge from conventional Elliott Wave theory in that I do not believe in an eternal fractal pattern in which every bull or bear market is part of a larger degree pattern. I have found that it is more helpful to consider each bull and bear market as an isolated event.

Next I have a chart of Spain’s IBEX-35 index:

IBEX 35 long term Elliott Wave


The IBEX was in a bear market from 2007-2012. Unless proven otherwise, I think it makes the most sense to assume that the bear market ended in 2012 given that it had a classic 3-wave decline and a long duration of five years. However, it looks like the IBEX is in the fifth Intermediate wave up from the 2012 low, which implies it is close to the Primary 1 top.  From an intermediate-term perspective, this is a dangerous situation given that other European indices had Primary 2 declines of 25-40% back in 2010-2011.

Next we’ll look at Greece:

Greece stock market long term Elliott Wave

The ASE appears to still be in a huge expanded flat that began in 1999. The C Wave appears to be subdividing into five waves (which is expected in a flat), with the fifth wave decline underway now. The ASE will probably fall below its 2012 low later this year and then begin a long term bull market.

Last we’ll look at Italy:

MIB long term Elliott Wave

The MIB appears to be in a double-zigzag bear market that began in 2000. It appears that a terminal C Wave is underway now to complete the pattern and will result in a decline below the 2012 low.

A Macroeconomic view:

The European stock market performances and Elliott Wave counts make sense from a Macroeconomic perspective. Germany has been one of the most stable European economies, and it also has the most bullish Elliott Wave pattern. Italy and Greece have been two of the weakest economies, and their stock indices have ongoing bear market patterns. The U.K. and France are somewhere in the middle economically. Correspondingly, their stock indices have bull market patterns but are more subdued than Germany so far.

Elliott Wave theory generally expects that visible economic improvement will begin at or before the midpoint of a bull market’s third wave. For the U.K., France, Germany, and Spain, this implies that a strong economic advance will began within the next year or so.

Sources of stock index data:




Inflation-adjusted index data –









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