Dow (24,024)

Dow dropped sharply on Tuesday with an intraday low of 23,829 (-619 points) as the benchmark U.S. 10-year bond yield broke the 3% level for the first time in four years.

The major wave 8 has slowly evolved into a 3-3-3-3-3 A-B-C-D-E corrective wave instead of a simple 3-3-5 A-B-C pattern.

Dow started to climb up from its low of 6,547 level in March 2009, that was 9 years ago, to its current level of above 24,000 for a gain of more than 260% after the Federal Reserve started its monetary policy of 'Quantitative Easing (QE)' nickname 'Printing Money' policy in December 2008.

Looking at the chart, from its low of around US$800 billion in 2008 to its height of US$4.5 trillion in 2014, a total of US$3.7 trillion had been printed and injected into the market. It was this excessive liquidity coupled with low interest rate plus the subsequent improvement in economy that fuelled the current run in the Dow since 2009.

The next run-up will be the major wave 9. If the mega wave (VII) has only nine waves, the next mega wave (VIII) correction could be in the region of 40% to 50%.

Be very careful during the major wave 9's run.

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