The Big Picture

This is a living page – last updated June 10, 2016.

I think that in 2009, we saw the conclusion of a long bear market in the U.S. stock market that began in 2000. I have found the Elliott Wave Theory to be very helpful for intermediate and long term analysis. I will be referencing Elliott Wave patterns a lot on this blog. If you are not familiar with the theory, there is a lot of information available online. This site has a nice overview:

On my charts, I am using the following color codes for wave magnitudes:

Cycle: Red, Primary: Blue, Intermediate: White, Minor: Magenta

From an Elliott Wave perspective, the 2000-2009 bear market is best illustrated by the Dow Jones Industrial Average as shown below. Click on the charts for a higher-quality image.

Dow 2000 2009

The 9-year bear market took the form of an Expanded Flat. From the 2008/2009 lows, a major bull market began. This bull market will probably last at least through the end of 2016.

I am using the Nasdaq-100 (NDX) as my primary index for tracking potential Elliott Wave patterns in this bull market. Here is a chart showing my preferred wave count.

ndx 2009- jun 2016

It appears that the first four primary waves are complete (labeled in blue without parenthesis).

Primary I: Mar. 2009 – Apr. 2010

Primary 2: Apr. 2010 – Jul. 2010

Primary 3 (extended): Jul. 2010 – Dec. 2015

Primary 4: Dec. 2015 – Feb. 2016

Primary 5: ongoing from Feb. 2016

The extended 3rd wave appears to have a nested pattern of five primary waves that I labelled in blue with parenthesis.

As for how long it will be until this entire bull market ends, I find that Elliott Wave theory does not provide a lot of guidance. However, there is another technical pattern called Counts from the Middle Section, which was originally discovered by the technical analyst George Lindsay in the mid-20th Century. I think we are seeing an instance of that pattern now, which I discuss in this post. The counts currently project three possible tops: December 2016, December 2017, and August 2018.



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