Dow gained 138 points on Monday to mark the starting of sub-wave ix. The 209 points drop last Friday is the end sub-wave viii. Sub-wave ix is likely to bring Dow to the 16,000 level within the next 3 to 4 weeks. After that, watch out for the 8% to 9% wave (viii) correction in July.
The subsequent wave (ix) run-up can be interesting. It can either take the form of an euphoric parabolic run-up (Possibility 1) as mentioned by Toby Connor, then the mega wave 1 of the super wave VII has only five major waves and it can end in October with a 'bang' with crazy price movement and crazy volume.
The subsequent mega wave 2 may take a 40% to 50% plunge to the major wave (4) level of 10655 or it may go for a 100% retracement to 6547 level.
A second possibility (Possibility 2) is what Roubini has predicted in April, stocks to move higher for the next two years as the Federal Reserve continues with its US$85 billion a month stimulus programme
Under this possibility, mega wave 1 has nine major waves instead of five. The pull-back in early 2014 can be the major wave (6), a 15% correction.
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