Dow Rally Far From Over

[oldschoolwaver]

Upon further review of the Dow, we are in a Triple Flat. When looking at the below chart, it's clear that each wave-b has retraced more than 61.8% of the preceding wave-a.

While the most recent wave-b retraced more than 61.8% of wave-a, it was less than 81%. This type of retracement sets up for a B-Failure. When wave-b is this weak, you can expect wave-c to retrace at least 61.8% of wave-b. This gives us a minimum target of 11298.84.

It appears that the market will surpass the 11,300 target and make a new high based on the performance of the mid-cap indices. So, look to stay long until we touch the supply line of the channel. Once we hit this resistance line, it will be time to get short.

 

[ColinRiche]

Now thats what you call a good first post

Someone with an opinion right out of the box.

Thought no one watched the dow over your side of the pond though ?

What does the the story on the S&P tell you in comparison ?

you will have to look hard to find reasons to buy this market with the uncertainty of North Korea hanging over like a dark cloud.

Its a shame EW is so subjective and so damn inaccurate.

.

 

[dc2000]

Im not that hot at EWaves, but do agree to take long positions for the moment my own trading is looking for a move to 11441 before turning to go to the10500 level.

Does point b have to be at 10698? if 10500 came in the next 2 months would that become point b?

just my thoughts, nice first post by the way

 

[oldschoolwaver]

Im not that hot at EWaves, but do agree to take long positions for the moment my own trading is looking for a move to 11441 before turning to go to the10500 level.

Does point b have to be at 10698? if 10500 came in the next 2 months would that become point b?

just my thoughts, nice first post by the way

Point b is set at 10698. Once we break the b-b-b support line, we have officially begun the next leg down.

Now for a Dow Update.

Based on today's action it appears we are prepared to hold the recent uptrend in the dow. The key number now is the previous swing high 11,257.08. If we are able to surpass this level, we should be set to make the run for the supply line (resistance line in the above chart) in the 11,750 range. This will complete our B-Wave Failure and begin the next leg down. This down leg (8-year cycle bottom) will end in early/mid-October.

For all you historians out there, the last two 8-year cycle lows began their selloffs in mid July - 1998 & 1990.

1998

1990

 

[oldschoolwaver]

Upon further review of the Dow, we are in a Triple Flat. When looking at the below chart, it's clear that each wave-b has retraced more than 61.8% of the preceding wave-a.

While the most recent wave-b retraced more than 61.8% of wave-a, it was less than 81%. This type of retracement sets up for a B-Failure. When wave-b is this weak, you can expect wave-c to retrace at least 61.8% of wave-b. This gives us a minimum target of 11298.84.

It appears that the market will surpass the 11,300 target and make a new high based on the performance of the mid-cap indices. So, look to stay long until we touch the supply line of the channel. Once we hit this resistance line, it will be time to get short.

Dow Jones Industrial Average

Wednesday, July 19th 2006

Short Term Trend - Bullish 11700-11750
Long Term Trend - Bearish 9800 - 10000

Dow - Short Term Outlook

Today was just one of those days that makes you appreciate technical analysis. If you scroll below, you can see my post from Monday where we stated that we could potentially set a lower low in the next few days, but that there would be a major price shift to follow. Today was critical because we showed follow through to the upside after Tuesday's (7/18) sign of strength. Another key item to point out is that we surpassed above the 200-day moving average and we did so with an increase in volume. The key resistance point now is around 11,150 which is the downtrend line from the 11,670.19 high.

Dow - Long Term Outlook

The Dow is currently setting up a violent double bottom. Odds are we will make a minor penetration through the 10698 low (Actually Occured on Tuesday 7/19). Once we put this low in place, expect the Dow to make a new high for '06. This high will be in the 11,700 - 11,750 range. This high will be reached as early as August 14th and no later than September 1st. Once we reach this target area, the Dow will begin it's 8-year cycle low descent. This sell off will take us down to the sub 10,000 level. Expect the '04 low of 9,708.4 to be tested. This low will come on October 12th. Once this low is in place, the Dow will be ready to begin another multi-year impulsive move up that will take the Industrials to 12,000 and beyond.