Again we do not know which of the two first tops is the real top. We could count it either as a series of two 4-5s, making the second top the “real” one, or count the whole thing as a complex flat wave A. What does stand out fairly clearly, is that the latest climb up is a B-wave. It is near impossible to count it otherwise. From that point – 22 of May 2013 -   the index starts down with a perfectly clean and unmistakeable 5-wave wave 1. The rebound again is an unmistakeable 3-wave a-b-c that does not make a new high. We should now, if all this is correct, be in wave 1 of 3 of C. There could be a long way to go.

After an extended wave, which the one from 1985 ,or earlier, to 2000 on the chart clearly is, it is normal for the next pull-back to reach approximately the level of wave 2 of that extended wave. In this case that is the peak in late 1987 when we had the single largest one day pull-back. That level is at about 2500 on this index.

This count could be wrong if this index is in the early stages of making a contracting diagonal triangle ( read; wedge) the only structure that has overlap. This possibility that is in any event highly unlikely, will for all intents and purposes be negated with a drop below the lower trend-line where the index presently sits. Time will tell.

It was half a year ago that we latched on to the Footsie as one of the most   “expressive” indices , that had completed a very clear 5-wave down movement. The A-B-C that follows is essentially identical to the much larger A-B-C B-wave from the March 2009 lows. So far, despite retracements reaching almost 100%, these patterns have not negated the larger notion that the FTSE started its bear market back in May/June of this year. So, if it is not broken, we will not fix it and just wait to see what happens next.

This was that other, recent, coincidence. Whatever. In the mean time the London stock index retraced about 76% ( all retracements over the past 4/5 years have been unusually large), but unlike with the DOW , no new highs were made. That being the case we will now assume that we are in the initial stages of a wave 3. As wave 1 was about 900 index points , wave 3 could take the index down by 1.62X that or even 2,6X. (1440 or 2340 point). If any of this happens we will be halfway there. See Bloomberg chart below.