Related Topics
Stocks , Investing

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 …

Here's How Your Financial Forecast Service Team Works to Prepare YOU For New Opportunities

Read This, And Then Let Us Show You FFS in Action, 100% Risk-Free

Your Financial Forecast Service team includes three of the best-known market analysts in the world – Robert Prechter, Steven Hochberg and Pete Kendall. If you are familiar with Elliott wave analysis, you know exactly who they are.

No other analysts in the world, anywhere, undertake the depth of research that goes into the Financial Forecast Service. Throughout the month, Bob, Steve and Pete sift through mountains of data, often studying 100 years of data or more. Why? Because a chart of the big, long term waves is the only way to know precisely where in the pattern we are today – and therefore, precisely where we are most likely to go next.

Here's what you get with the Financial Forecast Service, 100% Risk-Free for 30 days

Every Month

At the end of each month, your team of analysts gets together and lets the sparks fly. The result? The Elliott Wave Financial Forecast. It's just one of three essential parts of your Financial Forecast Service. When you get a new issue, you can be sure it contains the most critical information you must know about the markets this month.

Three Days Per Week

In addition, at the end of the U.S. trading session every Monday, Wednesday and Friday, your team updates its monthly analysis with the Short Term Update. In STU, they prepare you for the most likely price moves in the next 3-5 trading days.

Latest Research

Finally, once every month, Robert Prechter sends you his very latest research about Elliott waves in the markets and society. For 30+ years, The Elliott Wave Theorist has delivered more groundbreaking market research than any other publication on the planet. One month Bob might prepare you for a multi-year move in a market; the next he will deliver a jaw-dropping study that challenges everything you thought you knew about investing. Whatever he writes, it will help you hone your grasp of the psychology behind the markets – and give you an enormous advantage over other investors.

Prepare for Risks and Opportunities That Will Surprise Most Investors

See our eye-opening forecasts for stocks, bonds, gold, USD and more.

Risk-Free, Start Your Subscription Now


for 1 month of unparalleled market insights