Minor Wave Four

The swing down from the November high could be the first wave of minor wave 4 from the July low. Unless it forms a larger zigzag, Tuesdays low may be the price low of minor wave 4. If that happens, support is at Dow 10900.

Minor wave 4 would then be followed by minor wave 5 to new highs and then a larger major wave 2 correction. A move down to the next support at 10700 may indicate that primary wave 2 is not complete.

Fifth Wave - 11/8/10

Wednesdays Twitter update said the NY composite index may be breaking out of a sideways wave 4 pattern from the Oct 13 high and a 1-3 wk 5th wave rally may ensue and the Dow may surpass the April high on that rally. That happened on Thursday/Friday.

The alternate possibility would indicate that the 5th wave will have already topped by today followed by a correction of some sort.

The strength of the market since the late September low indicates that the four year cycle low probably bottomed at the July or September low. The rally from that low usually lasts at least one year so there are several months to go at least.

The alternate count shown in the last few blog updates was a for a Primary wave [B] or [2] low at the July or September low. That now is the best count. An updated chart with counts will be posted later.

Dow Wave Counts - 9/30/10

Below is a nine month chart of the Dow that shows the current wave counts. Click to enlarge. With todays key reversal with higher volume, the (B) or (X) wave up from the early July low may be complete. If it's an (X) wave, the next low may hold above the late August low and has support at 10475, 10285 and 10085.

Potential Double Top Here - 9/22/10

The 7/28 update indicated intermediate wave (B) up from the late May low was at or near completion. The Dow made a short term peak of 10585 the following day,with the final top occurring just 7 trading days later on 8/9. That top of 10719 was just 9 points above the 10710 updated price target given in the twitter feed and less then 1% above the initial 10615 target.

The 7/28 update also called for the potential low of intermediate wave (C) and primary wave [B] in early to mid September or mid October. The Dow went down from the 8/9 top to form a triple bottom on 8/25 to 8/31. The final low of the triple bottom occurred on 8/31 just one day before that 1st early to mid September time target.

The subsequent rally has gone slightly above the 8/9 high in what may be a minor wave C expansion of intermediate wave (B) up from the early July low. That still looks like the best count, however intermediate wave (B) could still zigzag upward to form a more complex structure such as a minor wave C ending diagonal or the (B) wave of a flat. In that case, the next price targets up are 10850-10950 and near or somewhat above the April/2010 high. The lower targets are near 10540, 10400, 10215 and 10050.

As long as intermediate wave (B) does not move much above 10950, the 8900 and 8300 targets given on 7/28 are still a valid possibility for the low of primary wave [B or 2]. A higher target in or near the 9400-9600 range has also been identified. The other levels should also be expanded to in or near the 8700-9000 and 8000-8325 ranges. The mid October timing cluster given 7/28 has been expanded to early/mid October.

The alternate count given on 7/29 showed the April/2010 high as being the end of primary wave [1] with the July low completing primary wave [2]. That is still possible but the upmove from the July low looks more corrective than impulsive. The July low should have also been labeled [2 or B]. An upmove much above 10950 increases the chances for that count. A chart with Updated wave counts will be given shortly.

Wave Counts - 7/29/10

Below is a six month chart of the Dow showing the wave counts. It is now looking like the Dow made its high this morning without reaching the .62 retracement given yesterday. Click chart to enlarge.

Intermediate Wave (B) Ending? - 7/28/10

Minor wave C up from the early July low is near completion or may have completed at Tuesdays high. Minor wave C will complete a zigzag up on the Dow from that low. I suspect minor wave C is also the end of intermediate wave (B) up from the late May low. The 62% retracement of the move down into the July low from the April high is at Dow 10615. That is the best target price for the top of wave C(if Tuesday was not the top). A move much above that level next week may negate this outlook.

The next wave down from the wave (B) top has the potential to go significantly below the July low. If that happens the price targets for an intermediate wave (C) low are 8900 and 8300. Those are the 50% and 62% retracements of the bull move up from the March 2009 bottom. That low may complete primary wave [B] down from the April/2010 high.

Wave C's in time are usually between .62 of wave A and 1.62 of wave B. That calculation points to the period between August 16th and November 11th for the low of primary wave [B]. In that period there is a timing cluster due in early to mid September which is the most likely time for the wave [B] low to occur. The next most likely time is mid October when a weaker timing cluster is due. I will be posting charts showing the wave counts.