As the first chart I have shown DJI on a hourly basis. It looks like a series of ones and twos are playing out currently. If this picture is true there is much more room towards the up-side that the current rally from 10,185.98 can win, therefor a top is expected shortly for a break below 10,272.44 as sub-wave iii gains momentum.
A break above 10,393.13 will alter this picture and make it look like a 3-wave correction calling for a new move higher towards 10,438.40 and above, before black circle wave 2 is finished.
Moving in closer the above chart shows the S&P 500 on a 5 min. basis. As can be seen sub-wave 2 has become an irregular and wave 5 of c lookes like a ending diagonal. I would expect a small spike above the diagonal resistance-line, before sub-wave 3 down kicks into action for a move closer to 1,075 and problably closer to the 1,056 area.
Only a break above 1,112.21 would alter this picture and call for a sligthly higer high before ending wave 2.
This inverted head and shoulders we're looking at, I've been seeing this pattern accross diferent index/stocks/sectors in the US and Brazil as well, this could be a little trouble for the bear case don't you think ? A failed head and shoulders would definetely propel the down move ....
ReplyDeleteTake care,
Fred
Hi Fred,
ReplyDeleteYou are abslutly right. the inverted S/H/S could mean trouble for the bears, but as you also mentions, if this formation fails it will accelerate the downmove, which still is my prefered picture.
Right, right. Once I heard something from Art Cashin where he says - The market likes to fool as many people as it can/to create illusions, at this conjuncture that we're in, EW pointing to wave 3/C down and some bullish patterns like those appearing I think the market will do just that, again. A move down is also my prefered picture but with so many government people/banks behind the scenes, I would believe just about anything.
ReplyDeleteTalk to you later buddy,
Fred