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Tuesday, April 28, 2009

All Eyes on the DOW

The DOW is of course what Middle America and everyone else quotes, tracks and pays attention to. It does not look particularly bearish. It is very much in a contracting pattern beneath a key Primary wave 1 bear trendline.
I have discussed many times the theme of Primary wave 2 wanting to breakout of these bearish P1 trendlines. This would be the last major index to do so.
It could pull back some more first to 7825 or so to complete a clean contracting triangle pattern before a big break above the trendline, but it certainly doesn't have to. I have showed you a pattern on the SPX that supports a big move to 881 and the NASDAQ is still in bullish shape (the QQQQ's are within striking distance of its 200DMA) running ahead of the pack so the other indexes support a move up.
I guess you could say the path of least resistance is actually higher not lower.


  1. middle america is about to get the pig flu. not sure how the market reacts...maybe you get your does look very very good.

  2. Yeah this swine flu may be a big deal with a real negative economic impact.

    Contrarians would buy the market I suppose.

  3. good setup for a final fakeout?!

  4. Good to see your chart and confirm that I'm not hallucinating. The market is acting more resilient than most people think (or hope), PPT or swine flu or not.

  5. Dano, you are confusing me. the other day you said we are likely headed to 790 maybe lower. Two days of lower movement and now you are saying we are likely headed much higher. What in the last two days would change your mind about your counts from Friday???

    Can you show me a two month period in the SPX where it clearly shows a fading curve toward the downside that suddenly reversed track and went positive before the back said at least hit or went passed the start of the curve? Look at both the dow and the spx. the downward curve is forming and appears to be at the top of the curve which is followed by a steady move down below the initial point of the curve.

  6. Daneric,

    To me the fact that this index has been repelled so easily is bearish. It has been unable to break out. Actually if I recall correctly neither has the SPX (if you connect the other big rallies they all failed at the same trendline). Also, the 4th touch on support is coming up. "rule of 4" to come into effect and support to break? We'll see.

  7. One question though. Have you given any thought to how the potential rounding top would play out in EW?

  8. Beamer Dog, Sorry i know I called it lower but the waves keep painting a different picture every day.