Dow again

dow dec 24 2018

My educated guess is that we are today at the midpoint of wave 3 of 3 which means that we are also at the midpoint of the whole thing, that is what will probable shape out to be wave A of a large A-B-C  correction or just wave A of a large triangle that itself starts with an A-B-C.  We closed at 21792 and started from a peak of, I believe, 26952 on Oct the 3d. so 5160 points so far. If this is the midpoint we should get about the same number of points below today’s level.  21792-5160=16632 which does not take into account a possible gap!

All the Trump gains in the stock market are now gone and I have no doubt that he and Mnuchin will be able to erase much of the rest as well.


Note ; wave 4 of A is more likely to be a zig-zag that goes much higher than the triangle shown. This because of alternation between waves 2 and 4. @ is a flat so 4 might become a zig-zag.

Dow, why 16000?

Dow dec 22 2018 b

EW has many little and big rules or guidelines. The practitioner is tasked with applying these, sometimes almost blindly and not question the result.

When you peak you drop back to the 4th wave of previous degree. If you are not sure what previous means in this context just go for the simpler 4th wave in the past. That, in this case, is just below 16000. The real 4th wave of previous degree is, of course, much lower at about 6666 set at the low in May 2009.

Roughly the 5th wave channelled above goes from 7000 to 27000 or 20000 points. A , more or less MINIMUM retracement would be about 38% of that or almost 8000 points. That is where the bottom channel line runs today, 19000. However a more “normal” retracement would be 62%, or 12000+ points to about 15000.

5th waves are the last wave in a 5 wave sequence. Normally the entire 5th wave is retraced which targets somewhere slightly below 7000. But this whole sequence starts somewhere with the South Sea bubble in 1711 or a little earlier. Of the 300 plus years of history we only show a miniscule portion. The real 4th wave of previous degree is at the low of 41 in the wake of the Great depression of 1929 etc. People will think I am an idiot if I were to seriously suggest that, so I don’t. It is like road signs. If you go South you do not see a sign “Rio, Brazil”, instead it will say “Detroit”. Same principle.

Dow update

Merry X-mas everyone!

dow dec 20 2018

The Dow is behaving as expected. Except wave 3 so far has already travelled 3000 points (from 26000, top of wave c of 2) and we have not reached the mid point it seems so the 5000 points estimate may be too low. In our modest opinion 16000 for this whole wave, Wave A or 1, is achievable so don’t buy the bottom yet!

Dow update

Dow dec 3 2018

The great decline is imminent, right around the corner and has been predicted to happen at least ten or more times over the past 10 years by one of the leading EW purveyors. Clearly counting to 3 or 5 is not as simple as they would like you to believe. Impatience may be getting in the way of sound analysis.

Earlier it was clear that Nasdaq had gone through a corrective drop early this year. It stood out like a sore thumb. Here again we have a 2000 point drop mid November. This is a 3 wave affair that does not make a new low. It is definitely not 5 waves and therefore should be seen as a b-wave of sorts. Here probable a wave b within wave 2 counting from the top. It is even possible to argue that this whole year is nothing more than an ascending flat correction but that is unlikely seeing that wave a also does not look like 5 waves. Accordingly for now we go with the top in October followed by waves 1 and 2 – the start of a major decline – in which 2 may not be entirely complete but at least very close to it. Wave 3 in this analysis is actually right around the corner. If so it could easily measure at least 5000 points and may coincide with the Trump house of cards falling apart spectacularly.

At least as far as the Dow goes we have basically made no progress, either up or down, for most of this year. This in a remarkable contrast to the enormous increases in the previous years all the more so as such timid behaviour is at odds with all the geopolitical events etc. We will shut down for a few months, getting tired of waiting for Godot as a friend puts it.