Big bad Bear

FBMKLCI (1,303)

KLCI rebounded strongly on Friday, it added 83.56 points or 6.85%. With that, KLCI has ended its sub-wave vii at 1,219 level.

The rebounds for sub-wave ii, iv and vi averaged about 5% with each individual duration varied from 2 months to 3 months. But Friday's sub-wave viii rebound took only one day to get its full magnitude of 6.9%. Is KLCI going to plunge again next week to form its sub-wave ix?

If KLCI were to move lower next week to level lower than its last low of 1219, it may drop another 15% to 1108 level for its wave ix to complete its wave (iii).

But if KLCI is able to continue with its Friday's momentum to move higher for another day, and once it reaches 1340 level for a 10% rebound from 1219 level, then the current rebound will be more likely to be a wave (iv) rebound with sub-wave ix missing.

Under this scenario, wave C is likely to have 9 waves from (i) to (ix). Why? Because Covid-19 is still far from over for the whole world except China.

Dow (19,173)

Looking at the Dow 30-minute interval 6-week chart, Dow is at the sub-wave v of its wave (iii) of its wave A. If wave A has only three waves, the next rebound is likely to be wave B.

But if wave A has five waves, next rebound will be the wave (iv) rebound, to be followed by wave (v)'s drop.

The current pullback for Dow is likely to be a super wave VIII correction of 50% to 14,800 level.

From its February intra-day record high of 29,568 to last Friday intra-day low of 18,917, Dow has dropped 36%, this magnitude is about the same as that of the  mega wave (2)'s 1987 October 19 'Black Monday' crash of 36.15% as well as that of the mega wave (4)'s 35.6% crash (due to 2000's 'Dotcom bubble' when Nasdaq plunged from 4,698 to 1160 (-75%) and the 9/11 Islamic terrorist attacks on World Trade Center and the Pentagon in September 2001).

Technically the current drop of 36% is of the magnitude of mega wave (2), implying a near term mega wave (3) run as shown below. But since the Covid-19 pandemic is far from over, this option can be ruled out.

.