The Market Has Peaked, The Bear Is Confirmed, But How Far Will It Go? 4 Scenarios Inside.

By Christopher Diodato – TradersBase.com
Before I begin, I would like to point out that today’s prediction is the final product of months of different types of analysis starting in May 2011.  The following is mostly based on an unorthodox type of analysis called “Elliott Wave” analysis, which models human psychology and economic cycles using ratio analysis of both price movement and time passage.  Since I don’t like making predictions on broad market conditions unless I deem the results convincing enough to take action on, I have much conviction that this analysis is correct.

Even though several ideas can be gathered from this analysis, the main points I hope you leave with are,

  • Given the current data, the market has topped and a bear market has begun
  • The minimum target on the Dow Jones is about 10,000
  • The 9300-9600 area looks to provide significant support and could be a major market bottom
  • The worst case scenario that I would believe at this point is a decline to 5500
  • It’s unlikely that the Dow declines to 1000, unless a major, major crisis involving war, destruction, and hyperinflation/deflation occurred

 


 

The videos are best watched in order in full screen 720p HD mode. Each video quickly sums up the main points of the analysis.

Note:  A fellow wave analyst let reminded me that in the movement from 2008 to present, the motive wave 1 (May 10) and corrective wave 4 (August 11) overlapped.  That breaks one of the Elliott wave rules, which actually may make scenarios 3 and 4 the most likely ones.  Regardless, be ready for a bear market.

Preface

Part 1 – Best case

Part 2 – 2nd best case

Part 3 – 2nd worst case

Part 4 – Worst case

Same conclusion using classical analysis

 

Happy trading!

~Christopher Diodato

 

 

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Christopher Diodato

About Christopher Diodato

I have been trading since my eighteenth birthday to pay for my college tuition. It was at first rocky, but now trading is my love, my work, and my passion. In addition to my experience in markets, I have passed all three exams to obtain the Chartered Market Technician (CMT) credential. I believe that I am the youngest to ever do so! I want to help out small investors to make some money on the side. There's a common notion out there that "big money" rules all. I disagree. With enough hard work and discipline, anyone can become the next Paul Tudor Jones!