Major wave C in progress

As shown in the 5-year chart, Dow is at the early stage of major wave C that has an estimated duration of 15 to 20 months. It will drag until the last quarter of 2012, a good time to fish for some cheap commodity or financial stocks

The cumulative drop in the last two trading sessions of 593 points has taken me by surprise. I was expecting a more gradual drop with a smaller magnitude for this minor wave 2 pullback. I always feel uncomfortable whenever Dow does not behave as what I have expected. the sharp pullback at this stage has triggered me to look for other possibilities besides what I have in my mind originally as shown below as 'Possibility 1'.


Originally I was thinking of a 200 points pullback over 3 to 4 days before another surge to complete the sub-wave iv as shown above (Possibility 1).


With the sharp drop of close to 600 points in the last two day and Dow is only 98 points above the sub-wave iii, 10719 level, the question now is whether it will break the 10719 level. If there is another drop of more than 100 points next Monday, my 'Possibility 1' can be thrown out of the window and I will then have to focus on 'Possibility 2' where sub-wave iv has been completed, even though the magnitude is rather small and duration is rather short but based on the 'form', it is possible.

The next possibility, 'Possibility 3', which is the worst case scenario, is as shown below.


In this scenario, the sub-wave iii has not yet completed. Dow has only completed the mini wave (i) and (ii) of sub-wave iii, Dow is in the mini wave (iii) of sub-wave iii, the (iii) of iii, that is why the last two days drop has a magnitude of close to 600 points. I hope by next week I can zoom down to only one likely possibility.

For my not so technically inclined friends, just remember the followings:
a) Dow has started its major wave C.
b) Major wave C is likely to end below 6000 level. (My rough estimate at this moment. Should be able to have a better projection by mid 2012)
c) This down trend (bear) is likely to end before end of 2012. (Last quarter of 2012?)

As usual, when Dow goes to 6000, other world markets including Bursa Malaysia will go to a level that matches the 6000 level of Dow.


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