Dow Jones Industrials

This is the Dow Jones industrial Average.dow jones  april 30 2020

The chart is on a semi-log scale, and the y-axis is adjusted for the CPI, so the values are in “constant dollars”. It uses monthly closing price which is why yesterday’s close is recorded as 24633.86 which is easily six thousand points above the actual low that was recorded during this covid episode. That was on the 23d of March at 18213.65 – which was also not shown as it was not a month end. The point is that this chart is very granular and has a very low resolution which is normally a hindrance but if you are looking at the Big Picture it often helps by smoothing the sharp edges. Despite that I have adjusted the graph  by adding in red what actually took place. The distortion on earlier dates is always much smaller as the values of the index are so much lower.

The boys in Gainsville have always maintained that this entire wave from the depression lows to today is one single structure that actually started in England some 300 or so years ago, the Dow itself is only about 125 years old. If we accept that then this is the 5th wave and looking at this thing it seems to have all the attributes of a 5th wave, contracting diagonal in the ending position. These should structurally look like a 3-3-3-3-3, that is all 5 waves within the diagonal should be 3-wave affaires. As far as I am concerned that could be the case, certainly for 4 of the 5 with one a little more dubious. This is important as it explains why we stopped where we did, it also unequivocally calls for a continuation far lower as these structures more often then not retrace themselves entirely.

Having said that I should point out that the whole virus episode barely registers on this chart as, so far at least, it looks quite small. This is what a log chart does. Also time barely registers. This covers well over a hundred years so a single year or a fraction thereof is almost imperceptible. Patience is required!

DGC, Ducgiang Chemicals & Detergent Powder JSC

For some reason this stock shows up on Bigcharts as trading on Toronto. This is not the case. It trades on the Hanoi exchange.

DGC-Ducgiang Chemicals & Detergent Powder JSC, VN_DGC Advanced Chart - (HSTC) VN_DGC

Despite Trump’s recent recommendations with regard to detergents etc. , this is not why we bring up this stock. Instead we do so simple because we are always amazed how geometrically precise markets can actually be. To the superficial onlooker the trading looks downright chaotic and messy but underneath there is something going on that “organizes” things with unbelievable accuracy.

This is an A-B-C in Elliott Wave terms, a correction in simple English. What is remarkable is that after having lasted more than three years, the wave C manages to end at a point that is exactly equidistant along both the x and y axis, that is as a vector.  There is nothing random about this and it is equally doubtful that EW is very popular in Vietnam.

The pattern, by the way, is a 5-3-5 completed correction implying that there is considerable upward potential for those that like trading on the Hanoi exchange. I don’t and was simple looking for Detour Gold (was sold and does not exist anymore as an independent entity).



Zoom has done very well despite the virus and anyone owning it should be congratulated. But there is a time to buy and a time to sell. These actions require qualities that are seldom found in one person and require a great deal of flexibility of mind, something I certainly do not have enough of.

Anyway Zoom seems to have completed a 5-wave sequence, roughly from $60 to $180. Since this is a new stock we have no way of telling whether this wave is a third wave – to be followed by a 5th to complete the initial 5 waves- or already a 5th wave. In the former case, as no overlap between waves 5 and 1 is allowed, the stock can only drop to about $110 to use round numbers and the process could take about 4 months. In the latter case the stock could drop all the way to just above zero. Neither of these possibilities are very attractive.

Royal Dutch (RDS.B) and Crude.


crude oil historic

The bottom chart of WTI crude is from Trading Economics. It has a rather low resolution and consequently the highs and lows are not correct. Furthermore the whole chart is stretched a little bit in order to harmonize the time axis with the Bigchart  of Royal Dutch above it. What stands out immediately despite a reasonable level of correlation between the stock and the “stuff”, is that the stock has two peaks, the second one being the highest by a very slight fraction of a dollar whereas the oil peaks just once (at $144) and does not even get close the second time. Partly this may be due to the fact that commodities typically extend their 5th waves, not their 3d as is more normal for stocks. Also the 2009 stock crash was the result of a loss of integrity within the financial system itself which seemed to have been quickly remedied by the TARP programme. Whatever the differences in the dynamics of the two charts the end result is roughly the same.

It appears that both the stuff and the stock may have hit bottom. On oil the e-wave within the multi-year triangle has a low around $10. That LEVEL was reached on the JUNE futures contract the other day and then some.  $10 is not a sustainable level for oil. At that level 3/4 of US production would be uneconomical and all of the offshore activities and this is not likely to happen. Ergo Royal Dutch may have seen its lows already. That does not mean that it will trade back to the recent low of $19 but it might be worth looking at the buy side if the stocks trades into the gap at <$30. Keep in mind that the RDS.B chart is of the ADR, so there are 2 shares in each ADR. The yield is >11%

By the way, we had RDS.B as a buy with a minimum target of $56 5 years ago asper the analysis below;

rds.b 2015