Stocks: "A Perfect Meeting of Two Upper Channel Lines"
How to gain "clues to the future development of trends"
by Bob Stokes
Updated: January 11, 2019
Let's go "channeling."
No, I don't mean sitting on the couch in front of the television screen with a remote in your hand. I mean with stock market charts.
Here's an explanation from Frost & Prechter's book, Elliott Wave Principle:
A parallel trend channel typically marks the upper and lower boundaries of an impulse wave, often with dramatic precision [note: an impulse wave unfolds in the direction of the main trend, as opposed to a corrective wave]. You should draw one as early as possible to assist in determining wave targets and provide clues to the future development of trends.
The initial channeling technique for an impulse requires at least three reference points.
Both the upper and lower lines of a trend channel tend to serve as resistance or support.
In other words, in a bull market, when prices hit the upper channel line, they tend to reverse. When prices reach the lower channel line, they tend to bounce higher.
With what's been discussed in mind, take a look at this chart from the October 1 Elliott Wave Theorist, which showed the trend channels of both the S&P 500, which sported five reference points, and the DJIA, which sported six.
After mentioning both indexes, the Theorist noted:
Each of their highs on September 21 perfectly touched the upper channel line.
The implication was clear: expect a turn downward in both indexes.
Remarkably, Sept. 21 turned out to mark the all-time high in the S&P 500 with the DJIA reaching its record high just eight trading days later, on Oct. 3.
As you know, since those all-time highs were reached, the stock market has experienced a great deal of volatility. The S&P 500 and DJIA ended 2018 down 6.2% and 5.6%, respectively.
Our just-published January Financial Forecast Service, which includes the Elliott Wave Theorist, provides an important update on the market's technical picture.
You can get that update via a 30-day risk-free trial. Look below to learn more.
Don't Let Emotion Cloud Your Investing
Emotions: We all have them. But the push and pull of greed and fear can (and often does) trip investors up in financial markets.
The beauty of the Elliott wave model is that it helps you take emotions out of the picture. Clears them away.
What investors like you need -- especially at this historic market juncture -- is objectivity.
Our Elliott wave experts have been observing markets for more than four decades and are ready to share their hard-won insights with you.
Read below to learn how to tap into their insights, risk-free for 30 days …
Your Financial Forecast Service Team Helps Put YOU in Control of the Market’s Trends and Turns
Your Financial Forecast Service guides -- three of the best-known market analysts in the world:
- 1. Robert Prechter, Author of 16 market-related books, New York Times Best-Selling Author and Editor of Elliott Wave Theorist
- 2. Steven Hochberg, Editor of the Short Term Update and Co-editor of The Elliott Wave Financial Forecast
- 3. Peter Kendall, Author of The Mania Chronicles and Co-editor of The Elliott Wave Financial Forecast
As featured in:
You can be ready for risks and opportunities that catch most investors by surprise
Risk-Free, Start Your Subscription Now
for 1 month of unparalleled market insights
No datasource selected or available.