Have you heard about Elliott Waves?
It's a way to understand the movements of prices and anticipate shifts in trends.
A “Wave 5” for the ages?
According to the Elliott Wave Theory, markets move in five waves.
The first wave is small but noticeable, followed by a drop in the second wave. The third wave is the longest and strongest, followed by a pull-back fourth wave and ending with a fifth wave that pushes the price higher but does not give a return as large as wave three.
Investopedia has an example:
We can see this pattern playing out on the monthly chart from 2022 to today.
Let’s not get ahead of ourselves
Don’t stress!
We don’t know how high wave 5 will go.
This is a very long-term chart so it could take 2–3 more months to figure this out. For all we know, December’s high could have completed wave 5.
Once we see a pullback of any great size, we can talk about a “second chance” relief rally or complacency bounce before a larger, cyclical correction (like a bear market). At that point, we will reach the A-B-C portion of the image from Investopedia.
For now, we’ll just have to see how it goes.
Did you like this analysis? It’s a snippet from my
You can watch a video of that snippet on YouTube.
https://youtu.be/Z8EARP9pyjw?embedable=true
Mark Helfman publishes the
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