2003-2008: One Opinion
Excepting July 2006 to February 2007, the SPX and other broadly-based US stock indexes had a "heavy" or corrective feel and profile since March 2004. Chart analysis and sentiment analysis confirm that. The movement up from March 2003 to March 2004 was a definitely bullish impulse wave which was not continued thereafter.
I have borrowed my Elliott Wave approach from Elliott, Frost and Prechter, and from Neely. Each of the successors to Elliott has stressed a different aspect of Elliott's work: Frost and Prechter favor the simple 12345-abc with basic waves, and Neely favors complex waves mostly consisting of triangles. I use some of each, all of which is seen in Elliott's own works.
From March 2004 to July 2007 the modest rise consisted of back and forth movements suggesting an ascending triangle. For a long time I thought that the triangle started from the red 1 in March 2004 and ended in July 2006. That is still a viable pattern with the red 1 changed to red A and the black d to red B. That would make A to B into a running B wave triangle. However, a running B wave implies a lot more followup power than we saw thereafter. SPX went up ~374 points from the March 2003 low to March 2004, but from July 2006 low to July 2007 high SPX only gained ~357 points. So the power projection failed to validate that move as a second impulse wave,
or red wave C.
Given my assumptions and method, I think it makes more sense to consider that last move from black d to black e as a diagonal or terminal triangle which ended at the November 2007 highs. This is not a Glenn Neely count, but I see the whole move from August 2004 to November 2007 as a "bow tie-shaped" triangle irregular B wave whose end was above the end of red wave 1.
From the November high to the March 2003 low was clearly an impulse wave down with the five waves being easily discernible even on a weekly chart. Thus a-b-c equals the wave 2 correction of wave 1 of 2003-2004.
Related Stories
The above story is the opinion of the author only and it does not reflect
iStockAnalyst opinion. Further, the author is not personally advising you
regarding the suitability of the story for your investment needs. In no event
iStockAnalyst will be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage
whatsoever arising from or arising out of, or in connection with the use of this
information. Please consult your investment advisor before making any investment
decision.
