Volatility of the kind the markets have seen this summer has investors paying close attention to financial gurus' predictions about what's coming next. As a result, buzz about the Elliott Wave went viral over the last week as media groups and bloggers talked about Robert Prechter's forecast for U.S. stocks.
Prechter, the founder and CEO of Elliott Wave International, along with colleagues Steve Hochberg and Peter Kendall said in their latest Global Market Perspective that U.S. stocks are slicing the neckline of a classic head-and-shoulders pattern in technical analysis, which could lead to market disaster.
When the Elliott wave count and a head-and-shoulders pattern are saying the same thing about the stock market, they say, big trouble can follow.
"The coming months hold the potential to be the most exciting of the year so far," they wrote. "Once the neckline is breached, the measured move for the selloff targets the area surrounding 8,000."
