Dow - Heading for 'Double Top' Reversal ?

Dow gained 218 points (1.68%) on Tuesday to end the day at 13,177 level. This is the highest level since its bottom of 6,547 on 9th March 2009, 36 months ago. A 101% gain over 36 months, not bad, despite of the financial problems in Europe.

How high can Dow go? Looking at my long term wave counts for Dow, there is no change to my hypothesis, Dow is either forming a mega wave 6 as shown in Option 1 below, with a possible high of 14,164 for major wave b to form a 'Double Top' reversal pattern.

All base charts are courtesy from stockcharts.com

Or Dow is forming its super wave (IV) as shown below under Option 2. Dow is forming its major rebound wave with possible target at 14,164 level, same as Option 1. The current rebound may drag until end of 2012, also same as Option 1.



A possible wave form from now until end of 2012 or earlier is as shown below. Major wave b for Option 1 and major wave 2 rebound for Option 2. Whether it is major wave b or 2, it is likely to form 7 waves as shown below with a possible high of 14,164 the October 2007's high.


I have developed another option, 'Option 3' that looks unlikely at this moment as it is too bullish in view of the Euro debts' problem. Under this Option 3 scenario, the 1975 to 1983 wave was considered as wave X-a-b-c , part of a complex mega wave 4. Mega wave 5 ended at 11,722 in January 2000. October 2007's high of 14,164 becomes the wave b of an expanding a-b-c correction, with c ended in March 2009 at 6,547 level. Since then, Dow has been forming part of its mega wave 7 in the last 36 months and it is heading for at least the 20,000 level, another 50% to go. Too bullish & unlikely at this moment. It is also difficult for me to accept a 'mega wave b' at 14,164 level, that is 21% higher than mega wave 5 at 11,722 level and this b has 5 waves. But from the chart below, the shape of the expanding a-b-c looks OK.

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