Elliot Wave Primary Wave 3 Down Will Begin in 2010
Many Elliot Wave theorists are in agreement that Primary Wave 3 will begin in 2010. The stock market's recent move off of the highs may indicate that P3 is already under way. The financial collapse and stock market crash in 2008/early 2009 represent P1. The recent cyclical bull market rally in 2009 represents P2, and the upcoming nasty wave lower to begin in 2010 will be identified as P3. P3 is expected to squash social mood, and take the stock market below the March 2009 bottom.
Many Traders and Investors who study Elliot Wave theory believe that Primary Wave 3 will begin in 2010. This is a 5 wave cycle down off of the 2007 peak in the stock market. Wave 1 completed in 2009, and wave 2 may have already completed or is very close to completing. To be sure, wave 3 will begin at some point in 2010, and take the stock market much lower. Elliot wave theory identifies overall social mood, and works much better in hindsight which makes it hard to determine when exactly P2 will end and P3 will begin.
Primary Wave 1 began when the stock market peaked in late 2007, and finally bottomed out in March of 2009. For those who remember, the collapse was sudden, intense, and caught many investors off guard. P1 took the major stock market indices down over 50% before bottoming out.
Primary Wave 2 began in March of 2009 when Primary Wave 1 came to an end. This wave has restored some confidence to investors, and has led many investors to believe that the next 5 year bull market is underway. P2 is also responsible for converting bears into bulls and creating an over bullish atmosphere in light of high unemployment and extreme government debt levels. Many Elliot wavers believe that P2 came to an end in January of 2010, after taking the stock market indices over 60% higher in less than 1 year.
Primary Wave 3 has just begun or is expected to begin sometime in 2010. This wave lower will crush investor confidence, and send the stock market plunging to new lows below the March 2009 bottom. For those who remember the crash in 2008, P3 is expected to be more intense and more devastating than P1. If P3 takes the markets down at least another 50% as P1 did, then investors should expect the Dow Jones to move lower to at least the 5,300 level or perhaps even lower.
The stock market will continue its trek lower in 2010 as Elliot Wave Primary Wave 3 will begin to unfold. Investor confidence and wealth will once again be devastated as rising unemployment and mounting debt levels at the consumer and government level will begin to cripple the economy. P3 will take the stock market lower in 2010, but unfortunately the real bottom will come after all 5 waves have unfolded sometime after 2012.