Wave 3 is complete

Wave three appears to be complete and we are in the final stages of wave 4. During wave 3 we were short the market. We covered and went long for wave 4. Since wave 4 is complete or almost complete, we are prepared for the reversal. The next wave is wave 5 down. Wave 5 down may end with a selling panic. My strategy is to be short the market but we will cover our shorts before the end of wave 5. Wave 5 will be followed by a corrective A-B-C move. Go long for the corrective move. Robert Precter recently stated that this is the opportunity of a lifetime! I believe it. But only if you know how to follow the wave theory. Check out the chart to see if you can see the theory in action.

elliott wave three

It appears that we are indeed in wave three. Those who have studied EWT know that wave three is longer than wave 1. So we have further to go. On the SPX daily chart shown here we point out the end of wave 1 and wave 2. The question now is where does wave 3 end and reverse. The signs I look for is a reversal in the stochastics and in the MACD. Also the advance/decline ratio will expand. Right now it is about 2 stocks down for 1 stock up. Ultimately, the ratio will be about 20 down for 1 up. My strategy is to hold the indexes short and to prepare for the reversal. At that time I will go long for wave 4.