Back in February I did a number of Dow Jones analysis’ where I predicted the temporary bottom of 7000, it actually went to 6500. Since then we have seen an uptrend, but very important, the uptrend cannot be counted as an impulse. It is a correction and most likely an WXY double zigzag correction.
The prediction in February was a Dow back to 9500-10000 area. That is happening as we speak, we are already at the bottom of the target area and caution is now required for a reverasal. (For a history of the analysis click the “Dow” label bottom right of this webpage.)
February Chart
Current Chart (weekly)
Comment:
Elliott Wave:
With WXY double zigzags we are looking for equality between wave W and wave Y, that would put the dow at 10532.08 a little over the 50% fibonacci retrace from 14217 to 6460.
What you can see here in the longer term is that this is counted as an expanded flat. The top of 14217 is actually a wave B. Even if counted as a wave (5), we would still have the end of wave 1) at 6460.
What you cannot see on this chart is that wave (2) of supercycle degree was rather sharp. Elliott Wave guidelines say that when wave 2 is sharp wave 4 will likely be a sideways correction, a triangle of some form. That means we will be in for a long recession.
Indicators (RSI & MACD):
MACD is turning bullish on the weekly chart by crossing the o (zero) line, it will be interesting to see if it can stay above zero on a downturn. A cross back down will be a vey bearish sign.
Fundaments/News:
Fundamentals are all over the place. Optimism is at a high, giving caution to us contrarians. Best thing is that all economists are falling all over each other to say what kind of recovery this is, u, v, or w recovery. 2/3 says this is a u shaped recovery. Well, we have a “v-shaped” reversal from the 6460 low, but are no way near a recovery yet.
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