We all knew that the TSE, Dax etc. etc. were at or nearing their respective 61.8% retracement levels and that therefore chances were pretty high that we could see the start of the renewal of this bear market. Little did anyone anticipate 1000 points ,almost in an hour or so, in what undoubtedly must have been one of the wildest rides ever. There were clouds in the sky, Greece, Portugal, Spain and the elections in the UK, but as the chief economist of one of the major Canadian banks so insightfully commented that he did not understand what Greece had to do with the Canadian stock market. With such a display of blatant ignorance one wonders why we listen to such back-water talking heads. Anyway the search is still on for what caused all of this, fat fingers, pressing the B instead of the M button, computer driven momentum trading and so on and so forth. The real explanation is that nothing out of the ordinary happened, the market simple followed EW patterns as becomes clear with a quick glance at the chart of the Dow Jones Industrials Average index, see below.
This is a 5 day chart that shows the recent high but may have missed some of the extremes, some of which have been cancelled. Clearly we were in a third wave as this event happened and are now about to do wave e of a triangle after which we should drop about 400 points to finish 3 with 4 and 5 still to go after that. The whole thing would probable be just minor wave 1 of 3 of C! Similar patterns are evident in other markets