What If You Could Spot One of History’s Fastest Rallies Before It Began?
By Elliott Wave International

On April 2, while bearish sentiment was extreme and many expected lower prices, subscribers to Elliott Wave International's Intraday Stocks Pro Services were shown a very different setup in the S&P 500.

In his 3:35 p.m. intraday update, analyst Robert Kelley posted this chart and wrote:

“The larger count labels today’s low as the bottom of a second wave pullback. That’s due to the clear three-wave drop into today’s low. If this count is right there will be a sizable advance next week. For now prices need to hold above 6501.90, the .786 retracement of wave iii so far, to keep this scenario in preferred status.”

The setup was classic Elliott wave analysis: a completed five-wave advance followed by a corrective three-wave decline — a pattern that often signals the trend is preparing to resume.

And notably, this wasn’t a vague bullish opinion. It came with a clearly defined risk level.

What Happened Next?

The labeled wave ii low held. And prices exploded. From that April 2 low, the S&P 500 surged to 7123.76 — a move of roughly +8.8%, part of what Kelley called “one of the fastest rallies in history.”

This illustrates how Elliott wave analysis can help identify important market turning points before they become obvious in price or headlines.

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This article was syndicated by Elliott Wave International and was originally published under the headline What If You Could Spot One of History’s Fastest Rallies Before It Began?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Elliott Waves Subsume Classic Technical Chart Patterns

By Elliott Wave International

Traditional technical-analysis chart patterns fit within the broader framework of the Elliott wave model.

Elliott waves subsume head and shoulders tops and bottoms, rounding tops and bottoms, triangles, rectangles, double and triple tops and bottoms, diamonds, falling and rising wedges, pennants and flags.

Let’s take just one example: the head and shoulders top. The excerpt below, from Elliott Wave Principle, shows how it fits within the Wave Principle:

In a normal wave development, wave five of 3 and wave 4 form the “left shoulder” of the pattern, wave 5 and wave A form the “head,” and wave B and wave one of C form the “right shoulder.” Wave two of C creates the return to the neckline that is typical of the pattern (below).

So, if you’re a fan of traditional technical chart patterns, the Wave Principle can consolidate them under a single model and help you determine which formations are most likely of real significance.

To learn more about Elliott wave analysis, read the definitive text on the topic -- it’s free.

This article was syndicated by Elliott Wave International and was originally published under the headline Elliott Waves Subsume Classic Technical Chart Patterns. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.