Coincidence, tradition or myth, the number 3 has a strong co-relationship with the stock markets.
From the aspect of Technical Analysis, 3 white soldiers candle stick formation is very bullish whereas 3 black crows formation is very bearish. In Elliot Wave, the up wave consists of 3 trust in wave 1, 3 and 5. After the 3 up trusts, it will be a downtrend. The down wave consists of 3 stages in the form of A, B and C. Following that will be a reversal to the uptrend.
From the aspect of events, normally, after 3 successive events, market trend will change. In January this year, after a series of 3 events, global markets sank to the bottom before a rebound. Middle East unrest, China inflation worries and the final event Japan natural disaster.
At the moment, global market is on a downtrend and all relating to weak or bad global events. Firstly, Greece's debt requiring a second bailout, China economy clear indication of slowing down after series of tightening to curb inflation and the final event that sent global markets sinking was the weakness in US economy. A weak job market coupling with weak economy data indication of slow growth made up the 3rd events.
If by coincidence, tradition or myth, global markets after 3 sharp drop should lead to a strong rebound. On 10th Jun 2011, US markets registered the 3rd one day drop of more than 1% lately and could lead to a rebound around the corner.
The number 3 regardless coincidence, tradition or myth, does have a history of having a co-relationship with which the stock markets behave.
