Dow - A mega perspective

Many economists equate the current economic crisis to that of 1929 Great Depression. Barry Eichengreen stated in his June article that "today's crisis is at least as bad as the Great Depression". The statement was based on economic statistic such as world industrial output, world trade, etc. If we compare the stock market behavior during these two crisis as shown below, we will notice that the March 2009's low is only half of that of 1929 Great Depression in terms of duration and magnitude.

Is March 2009's low the bottom? Some would argue that it is possible because during the current crisis the actions taken by various Governments were fast and different from that of 1929, fiscal policy of the governments was very aggressive and the amount of money that was pumped into the economy was enormous. And there is this dynamic Chinese economy, third largest in the world, with strong demand.

Based on Elliott's wave count, my interpretation for Dow is as shown below.

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From October 2007 to March 2009 Dow has completed 5 waves, by Elliott's wave principles March's low can either be major wave A or major wave (I), no other possibility unless I have make a mistake in my wave count. If March's low is major wave A as shown below, Dow is currently at the last 30 to 40% (at best) of wave B. At this level risk is on the high side.

If March's low is the end of major wave (I), the current rebound is major rebound wave (II) as shown below. Dow is currently in sub-wave 3 of major wave (II). Sub-wave 3 can be quite short.

Moving into the market at this level has to be very careful, at the end of the uptrend it is advisable to get out irrespective of gain or loss.