A Crucial Week Ahead

Top chart is 2 years Dow Industrial and bottom is 30 days chart both from yahoo finance.

"Where are we now?" Many have asked. I still like to monitor along my ABCDE possibility mentioned in my articles in November 2008. Wave A is from 14,279 (11 Oct 07) to 7552 (21 Nov 08. Intraday low 7392), a duration of 13 months, as shown in the top chart. Refer to bottom chart, from 7552 it moved to 8829 as wave (i), it then moved down to form (a), followed by 3 waves up to form (b), 3 wave down to form (c) and another 3 waves up to form (d) and finally an overshot 3 waves (e). What we have is Wave (i) followed by what Elliott called an "Ascending Triangles" corrective Wave (ii). So Dow has finish Wave (i) and (ii) by 24 Dec 2008. After Christmas, Dow continued by forming 5 small wave up until 9015 on 6 Jan 2009. On 7 Jan (Last night Malaysia), it fell 246 points to 8769.

A bearish technician may term 9015 (on 6/1/09) as (iii) and say "That's it, 3 waves rebound from the November 08 low of 7552 is completed, it is going to go all the way down to below 7552. If you are lucky, it may stop at 7552 to form a double bottom reversal pattern".

I hope he is wrong. I still like to maintain that Dow is in a major Wave B that can last for 10 to 12 months untill end of 2009. If so, from the low of 7552, we have finished uptrend (i) and corrective wave (ii). Dow is in the process of forming Wave (iii) that should go beyond 9300. The 9015 is subwave 1 of (iii), Dow is forming subwave 2 of (iii) at the moment. It may take 2 to 3 days and hopefully it does not go below 8500. Subwave 3 of (iii), hopefully, can start by early next week and go beyond 9300.Ultimately, this uptrend Wave B may reach a minimum height of 12,000 for the Dow within the next 10 to 12 months. However, if the current down drags more than 3 days and goes below 8500. I will really have to relook at my whole hypothesis.