TRADING JOHN MURPHY

[TREND1]

11/19 FIVE WAVE OCTOBER DECLINE IS A BEARISH SIGN ... The two previous charts shown above present a strong argument that the nine-year bull market in stocks has probably ended. Elliott Wave Analysis is also helpful in studying the nature of market downturns. As a rule, downside corrections normally take place in three waves (called an ABC correction). A three-wave decline often leads to a market rebound. A five-wave decline, however, paints a more negative trend picture. Like the one in Chart 3. The red numerals show my interpretation of the decline that's taken place in the S&P 500 since the start of October. And they show the October decline taking place in five waves. That usually suggests the likelihood of another downleg to come. At the very least, that calls for a likely retest of the October low. But it also increases the odds that the October low may not hold.


http://stockcharts.com/members/analysis/images/2018/20181119004-sc.png