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.

Stock Update - 5/23/10

Are now in a time period until the end of the month that could bring a significant low for stocks. That outlook could bring a test of the mid May and possibly April tops. Must first get beyond the trendline that extends from both tops. Once the low is in, the rally could last until the last week in July. The price low may have been on Friday but if the Dow goes back below the May 6th low, the next support is 9400-9700.

If the bull move up from the March/2009 low to the April/2010 high was wave A of a zigzag, then wave C of that zigzag looks most likely to top around the 1st quarter of 2011. That is based on statistical wave relationships, technical indicators and cycles that I look at. The Fibonacci price targets for a top are Dow 11260-11610, 12375-12500 or near the 2007 high of 14198.

Stock Update - 3/23/10

Todays price action in the Dow invalidates the ending diagonal count. The commentary from 2/19 now appears the correct outlook:

"A mild correction may form the right shoulder of a head and shoulders bottom followed by a rally above the January high. If so, that rally could be quite strong and last possibly into late Spring or Summer. That could indicate the original bullish wave three of three count(or wave five) from the March/09 low was the correct wave count. The wave X of (X) of [4] count shown last time, could also be valid in that scenario. It all depends on how the wave structure develops."

If this is a wave five up from the March/2009 low, then it must be less then 2100 points. That is because wave three was 2100 points and wave three can never be the shortest wave. 2100 points up from the Feb. 5th low of 9823 gives 11,923 as the maximum length of wave five. However if this is wave three of three or a wave X, then there is no such price limitation. For now the next price target is 11,020.

Note: After one year of doing this blog, this will be the last of the regular blog posts for the indefinite future. That is so I can spend more time on my trading and do some research. However , I will do an update if I can identify a major turning point such as the July/2009 or March/2009 lows.