A 4% Black Candle Down

Top chart is Dow 3 months and bottom chart is Dow 2 years from Yahoo

With 2 spinning top at high volume and yet Dow has a 4% all black candle down, it is very bearish. The accumulators must have sensed by now that time is on his side, there is no need to hurry. The probability that Dow is currently in Major 12 months Wave B that I have been maintaining is very small. However as long as Dow does not go lower than the November 2008 low of 7552, the slim chance is still there.

With the latest 4% drop in Dow, it appears that the other option that Dow is in sub-wave 5 of A is having a higher possibility. If this sub-wave 5 take the same magnitude and duration of sub-wave 1, that droped 17% from 14164 (9 October 2007) to 11740 (10 March 2008) within 5 months, sub-wave 5 can drop from 9034 (2 January 2009) to 7500 by early June 2009, a long jurney indeed most likely in the form of overlaping diagonal wave. This can lead to a double bottoms or tripple bottoms reversal patterns. This is a long and shallow route. Some time it can take the route of short and sharp. Under the short and sharp alternative Dow can complete the sub-wave in about 2 months but with a greater magnitude exceeding 20%. Since Dow is already at 7949 last night, if it can reach the previous low of 7552(a tempory support) within this week, this location is only sub-sub-wave (i) of sub-wave 5 unless we have a failure sub-wave 5. The rebound from 7552 can be sub-sub-wave (ii) follow by a "run for your life" (iii), which can punch through 7552 (intraday low 7464) with a long, very long black candle.

If Dow really goes for A Wave with 5 sub-waves follow by a 20% Wave B rebound, The Wave C (another 5 sub-waves down) will take Dow to 3000 and below, this is an economy crisis equivalent to the 1929 Great Depression. My opinion at this juncture is still possible but unlikely but don't forget Murphy's Law.