Prechter: The Market May Go into "Critical Condition" 8/17/10

http://www.elliottwave.com/r.asp?acn=trd5&rcn=aa130&dy=aa081710&u... In the August issue of his Elliott Wave Theorist, market forecaster Robert Prechter alerted readers that the U.S. stock market was slicing the neckline of a classic head-and-shoulders pattern in technical analysis, and that this may send the market into critical condition.

Prechter said that when the Elliott wave count and a head-and-shoulders pattern are saying the same thing about the stock market, it's best to pay attention.

Here's how the August issue of the Elliott Wave Financial Forecast, the sister publication to Prechter's Theorist, described the head and shoulders pattern unfolding in the stock market:

"The weekly Dow chart shows the development of an intermediate-term, head-and-shoulders pattern from the January high at 10,729.90 to the present. The January high marks the left shoulder, the April 26 high at 11,258 is the head, and the right shoulder is now ending. The April Theorist discussed the pertinent characteristics that Edwards and Magee used to define this technical pattern ... all apply to the current formation. Observe how weekly stock trading volume has contracted during the development of the right shoulder, a necessary trait of this pattern. The downward-sloping neckline -- exactly as on the big ten year pattern -- displays market weakness, which is consistent with our interpretation of the wave structure."

Here's what Robert Prechter himself said in a recent Elliott Wave Theorist:

"Generally, when the neckline slopes downward, the right shoulder does not rise to the level of the left shoulder ..."

Read some of the latest nuggets directly from Robert Prechter's desk -- FREE. Click on the link below to download a free report packed with recent quotes from Prechter's Elliott Wave Theorist.
http://www.elliottwave.com/r.asp?acn=trd5&rcn=aa130&dy=aa081710&u...

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• stock market

[sang3Eta]

Hard to predict the Fed would come in with QE2 and save the market again. Will they be able to afford QE3 to save the market again in March 2011? Lets see.

[harizal5]

well that was as wrong as wrong could be. great call.....not

[Sempertacsil]

Yeah, it's weird that the "smart money" has been driving down long-term treasury yields to new 52 wk lows....and yet the equity indexes hasn't followed suit. These same yields bottomed back in late Dec '08...a full 3 months before equities did. Sooner or later, equities have some catching up to do.......to the downside that is.

[orangedac]

so are you saying the next move is sharply to the downside?

[ednan9]

I much rather read his social behavior theories, that make much more sense...

[ednan9]

@UPSIPO can you say something else from a economics and finance prespective...you dumb donkey

[UPSIPO]

Robert Prechter Garbage! What about Elliot Wave Principal?

[fal2grace]

thank you

[edro2383]

good post.