Dow gained 354 points (+1.46%) on Monday to form the mini wave 4, a small technical rebound. This rebound is expected to end within a day or two before Dow continues to move lower to complete its wave iii. After that Dow is expected to have a stronger wave iv rebound before its final wave v drop to around 23,000 level to complete the major wave 8 during the first quarter of 2019.
FBMKLCI (1,701)
Two months ago in September, I presented two possible wave counts for KLCI as shown below.
Option No. 1
Option No. 2
Since then I have been giving a higher probability to the Option 2 wave count, a mega wave (6) formation.
But now the Option 1 wave count appeared to be more likely for two reasons. The first reason is time factor. If Dow were to start its major wave 9's bull run during the first quarter of 2019, KLCI will not have enough time to complete the wave C of the mega wave (6) that required at least another 12 months.
The second reason is the OBV divergences for KLCI as shown below.
With the Option 1 wave count, the wave (ii) of major wave 5 is possible to end during the first quarter of 2019, same time as the Dow completing its major wave 8.
Under this scenario, the major wave 5 of KLCI will end together with the major wave 9 of Dow within 2 years before the starting of the next big bear trend as mentioned by Steve Cohen.
Dow in 50 years
Possible but still need to watch out for the big bear in 2020.
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