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Tuesday, December 22, 2009

DOW Transports.... 75 - 85% Chance P2 Tops Tomorrow.


Ha got your attention!  Well, I feel that way and many charts are looking about "there". The transports happen to be one of them.

I also happen to think once a down move in the market comes again, like Gold, its going to keep selling for a bit.

The Dow Transports more than almost any other index really sports a Triple Intermediate zigzag formation. For you beginners out there, there can be no more than 3 zigzags in any corrective pattern of one larger degree. Thats why it ends at (Z).



Taking an objective look at the final zigzag, the transports cannot really be "shoehorned" into any other zigzag count (if its a zigzag of course) other than how I have it labeled.  The "A" is where it is and the "B" pretty much only fits in one spot. This is an important point I think as it creates a firm "marker" from which to reference a count.  Unlike the other indexes which show sideways patterns that can be interpreted several ways.

Take a look at wave [iv]. It overlapped wave [i].  Thats signalling an ending diagonal pattern which is a final pattern type move. The move off of wave [iv] has distinct "abc's" in pushing the price back up. Perhaps this is forming a wave [iv] triangle. In either case, its signalling the final set of moves for the transports.


Now looking at the 5 minute chart, the last set of moves counting up from green [iv] at 4099.88 definitely has zigzag looks about them. That is classic  ED formation structure.  So it could be an ending diagonal within an ending diagonal. And in fact, perhaps the final move up has failed! That would be very bearish if we had those three conditions all present at once!
Also notice wave [iii] is 74.4% of wave [i]. Shorter as it should be and near a nice Fib percentage. If then the transports topped at 4200, then wave [v] would be about 38% of wave [i] and 50% of wave [iii] roughly. Also C would be about 62% of A.  All the Fibs work nicely for this pattern!

We'll find out tomorrow. If the market opens upward and the transports squeak a new high, thats all that is required for this pattern.

Based on this pattern fulfilling, I'd say there is a 75-85% chance the market tops tomorrow in P2 for good. Well, at least for the transports anyway. But the rest of the market shant be too far behind.

Bullishness is likely off the wall. Bears are....extinct.
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