Bob Prechter Explains ‘Triple Top’ Forming in U.S. Stock Market

This excerpt from the special video issue of the August Elliott Wave Theorist brings you Bob Prechter’s analysis of the triple top that has been forming in the U.S. stock market over the past 12 years. Watch as Bob himself explains what this pattern means for you and the markets.

You can get more analysis – including an 84-year study of stock values – that will help you gain perspective about the recent market moves with Elliott Wave International’s FREE report, “Reality Check: Studying the Past to Bring Clarity to the Future.

You’ll get a glimpse into the in-depth analysis Robert Prechter presents each month in his Elliott Wave Theorist with 3 excerpts from his most recent issues.

Don’t let extreme market volatility leave you confused and scared. Prepare yourself for today’s critical market juncture with your FREE report from Robert Prechter.

Read Bob Prechter’s FREE report “Reality Check: Studying the Past to Bring Clarity to the Future.”

Another Day, Another Mixed Performance

September is a month that traditionally has been very bad for the stock market. Accoridnig to Stock Trader’s Almanac, based upon last 61 years performance, September has been last in terms of monthly performance. The Almanac also notes that the beginning of the monthe is better than the end of the month. Also, three sectors – consumer, healthcar and oil – have seasonly done better in September.

Daily Pivots:

  Dow S&P500 NASDAQ DJTRA R2K FTSE DAX
Previous 13,091 1,407 3,067 5,007 812 5,758 7,015 17.47
Open 13,092 1,407 3,063 5,007 813 5,754 7,013 18.65
High 13,092 1,409 3,082 5,028 824 5,757 7,016 18.96
Low 12,977 1,397 3,040 4,956 807 5,658 6,920 17.85
Close 13,036 1,405 3,075 5,008 822 5,672 6,933 17.98
Change % (0.4)% (0.1)% 0.3% 0.0% 1.2% (1.5)% (1.2)% 2.9%
Change (54.90) (1.64) 8.10 0.87 10.05 (86.40) (82.25) 0.51
Close (vs. MidPoint) Hi Hi Hi Hi Hi Low Low Low
TR % 0.9% 0.9% 1.4% 1.4% 2.0% 1.7% 1.4% 8.5%
Resistance 2 13,150 1,416 3,108 5,070 834 5,795 7,052 19.37
Resistance 1 13,093 1,411 3,091 5,039 828 5,733 6,992 18.68
Pivot 13,035 1,404 3,066 4,998 818 5,696 6,956 18.26
Support 1 12,978 1,398 3,049 4,967 812 5,635 6,896 17.57
Support 2 12,863 1,385 3,007 4,895 795 5,536 6,801 16.46

Charts Are Not Broken:

SPY is still knocking at the recent high. A break above the resistance would be hugely bullish. The current trend limits the downside to the uptrend line.

 The consumer sector $CMR – Morgan Stanley Consumeer Index – is trying to stay above the just broken resistance level.

The Consumer Staples Select Sector – XLP – is in moving upward within an uptrend channel.

 Morgan Stanley Healthcare Providers index – $RXH – is trying to overcome July-2011-high-resistance.

 The corresponding ETF – XLV has broken above a resistance level and is trying to stay above it.

The third sector that seasonally does better in September – oil – is also uptrend though it is taking a breather. Amex Oil index – $XOI – is finding a resistance at 61.8% Fibonacci retracement level.

UGA – United States Gasoline Fund – has made a sharp V-shaped recovery since the decline that begun in April and is now above that high.

Chairman Bernanke’s Jackson Hole speech speech brought the shine back to gold. GLD was making a decent recovery after making a bottom in May and the speech made it much more credible.

The gold miners and junior  miniers – GDX & GDXJ – are delicately poised just below a resistance level. A convincing break above will have significant upside.

Finally, materials may not be in the limelight but XLB has been trending up in a upward sloping channel since early June. It is at the lower bound of the channel. Previous three such lower-limit touches were followed by decent bounce.