Sunday, December 8, 2013

Worst case scenario - Expanding Triangles

Bearish Option

Refer to Matthias Chang's 'Dow at 16,000 - Suicide Poker' and several of his other articles, I guess Dow with an 'Expanding Triangles' will fit into the magnitude of the coming financial tsunami in his mind.

In this bearish option, the year 2000's peak at 11,722 marked the end of super wave (V) as well as the end of grand super wave (III) as shown. Grand super wave (IV) is a 3-3-3-3-3 expanding triangles formation.

The bull run since 2009's bottom is the mega wave D that has 7 major waves. Major wave (5) is about to complete. After that Dow will have a major wave (6) correction to be followed by the final major wave (7)'s run-up to complete the mega wave D. Mega wave E may fall short or it may also over-shoot on the down side to 5,000 or 4,000 level for Dow. If Dow can hit 17,000 before it drops to say 4,000, that is a 76% drop.

Not So Bearish Option

In this option, assuming the 'Untested New Concept (flood the market with money)' of the central bankers some how can work, then the bull-run since the 2009's bottom is the mega wave 1 of the super wave (VII).

Major pullback will only take place after the completion of the mega wave 1. The only question now is whether mega wave 1 has 5 or 9 major waves.

Possibility 1 - Mega wave 1 has 5 major waves.

Dow is about to complete the wave (ix) of its major wave (5) as shown below. The mega wave 2 correction may bring Dow to the 11,000 level for a 30% correction.

Possible paths for wave (ix)

For either case wave (ix) is likely to end during 1st quarter of 2014.

Possibility 2 - Mega wave 1 has 9 major waves

Still a long way to go before the completion of  major wave (9) and before the mega wave 2's 30% correction takes place, may be in 2015. Since the 2009's bottom, Dow is about to finish its major wave (5). It still has major wave (6), (7), (8) and (9) to go.


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