ajtj99's Market Pulse

[BullDawg]

Prechter Calling for Crash

NEW YORK (MarketWatch) -- The jury's still out on the latest wiggle of the Elliott Wave. And although some angry readers disagree, we believe the theory merits watching.

Recently, I noted that the Gainesville, Ga.-based Elliott Wave Financial Forecaster was arguing that the Dow Industrials' chart action was making a classic bearish "diamond" and that a break below 10,300 would be very bad news -- that is, the blue-chip barometer would be poised to head several thousand points lower. (See Oct. 3 column.)

The Dow duly did close below 10,300, and for a moment EWFF's call looked very good.

Wednesday's 128-point bounceback hasn't totally erased that. For example, Dow Theory Letter's Richard Russell complained that the market's breadth "was not impressive."

But it couldn't have been a great day for Bob Prechter, head of the Gainsville Elliott Wave industry. Under the heading "DRAMA AHEAD!" his Elliott Wave Theorist had put out this alert at 9 a.m. on Wednesday:

"The wave two bound in the Dow ended four trading hours ago. Wave three down is beginning. Expect the market to develop into a crash, with panic increasing into Halloweeen and then culminating within hours. From that low, the market should stage a dramatic three-day bounce for wave four and then resume declining to lower lows for wave five. This decline should leave 10,000 behind for good. Investors stay in cash; speculators stay short. Gold and silver are reversing downward and will not provide sanctuary from crash."

http://www.marketwatch.com/news/story.asp?guid=%7B0543F5C6%2D01B6%2D4B6F%2D84AC%2D4B24AB24D5E6%7D&am...