Dow about to start its final 5th Wave

Both Nasdaq and Dow are in Wave 5 of Major wave A. They have completed their respective sub wave i, ii and iii and are currently in their sub wave iv. Judging from the following 6 months Candle Stick chart, in the last two sessions, Dow has formed a "Doji" followed by a "Shooting Star", this is a very bearish formation. It is of very high probability that sub wave iv has been completed, Dow should be moving in a downtrend direction for 4 to 6 days to form its sub wave v and to complete the Wave 5. Hopefully that can mark the end of Major Wave A and the starting point of the bear market Major Wave B rebound. The rebound should be able to last at least four to six months.


The performance of Finance stocks that have dropped more than 90% since October 2007 was fantastic. From their respective lows set 6 days ago, their stock prices have more than double. To catch these stocks 6 days ago on their way down really needs great courage because at that moment nobody know whether they were going to drop another 20% the following day.

AIG has finally completed its Major Wave A with the completion of wave 9 at 33 cents US. It closed Monday trading at 83 cents with an intraday height of US$1.00. Hopefully its wave 2 pull back can go below 40 cents to provide a good entry point for those interested in this stock.

Citi Corp. has a similar chart formation to AIG, from its low of US$1.00 6 days ago it moved to a height of US$2.68 and closed at US$2.33. The US$1.00 low most likely is the end of Major Wave A. Most likely the Major Wave B has started ahead of Dow. Its next down can provide good entry point.

Bank of America has a different chart formation and currently there are two possibility to the wave count. The Wave A-B-C count as shown above is an Optimistic option, the low of US$3.00 it set 6 days ago marked the end of the Major Wave A (higher degree) and similar to AIG and Citi Corp, it has started its Major Wave B ahead of Dow.

Another option is more pessimistic, the wave A-B-C as shown can be counted as 1-2-3, the current rebound can be 4 and the next down together with Dow can go lower than its 6 days ago low of US$3.00 to form the wave 5 to complete Major Wave A. BAC under this option is lagging behind AIG and Citi Corp by one wave but is inline with Dow.