Sunday, August 23, 2015

Dow Plunged 1052 points (-6%) within 3 days

Dow (16,459)

With this 1052 points (-6%) plunge, I have to revise the designated wave (i)-(ii) to wave A-B. And if I am still talking about a major wave (6) correction. The 3-day plunge of 1052 points is the sub-wave 7 of C of (6).


Major wave (6) is likely to end around 16,200 level if it is a 12% correction.


I don't rule out the possibility that it may go for a 15% correction, same as that for the major wave (4) pullback, then major wave (6) can end around 15,566 level.
 

Looking at the historical chart for Dow, I am assuming that the bull run since March 2009 is the super wave VII.   



The next possibility which I considered as unlikely at this moment is that the mega wave 1 has ended, the assets bubble has burst. Then I have to switch the above mentioned wave A-B back to wave (i)-(ii), then the current plunge becomes the sub-wave 7 of wave (iii) of mega wave 2.


Under this scenario, mega wave 2 is likely to end at 10,600 or lower for a minimum 42% correction.

 

From the historical chart, this is the mega wave 1-2 of super wave VII.



FBMKLCI (1,574)

If Dow is forming the major wave (6), it is still possible that KLCI is forming the major wave 4.



However, if Dow is heading for a mega wave 2 correction with a minimum pullback of 42%, which I considered as unlikely, then KLCI can have a small failure major wave 5 ( looked odd), with that the mega wave (5) can be considered as completed. Then the current pullback could be the mega wave (6), 36%, correction.
 



Or the super wave (II) pullback of 56% correction, possible but unlikely.



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6 comments:

hkloon said...

Hi, good day to you... i did a small calculation on the FBMKLCI and found the following for the major 1 to 5, this is referring to the 1st scenario major wave (6):-
1) major 1 as mentioned by you started in 2009 until 2011, from 838 - 1570 (total 732 points)
2) major 3 started from 2011 to end 2014, from 1310 - 1872 (562 points).
3) from the wikipedia on elliott wave rule, Wave 3 cannot be the shortest of the three impulse waves, namely waves 1, 3 and 5.
4) Can I say that major 5 (if it kicks off) will be the shortest of the waves? Meaning less than 562 points? So can I say major 5 may just touched 2000 or just short of 2000 when completed?
thanks in advance...

Chan Kwang Yew said...

Hi hkloon,
Usually for a classical case, wave 3 is the longest leg. It can be 1.618x or 2.618x of wave 1. But there are also many cases where wave 1 is the most dynamic and is of the biggest magnitude follow by a shorter wave 3 and then a wave 5 which is equal to the magnitude of wave 3 or it is the shortest leg.The best wave 5 can have is 562 points to around 2000 level.

Chan Kwang Yew said...

If you look at the Dow, since March 2009, its wave 3 is the shortest and wave 5 is the longest, that is one of the reason why I think Dow won't end at 5. I am going for 9 waves for the current up-trend. Under 9-wave scenario, wave 5 becomes the middle wave and can be the longest wave. It is because for 9 waves I can break them into wave 1-2-(i-ii-iii-iv-v)3-4-5.So you can see why the current wave 5 for Dow is so long, it is actually the wave iii of 3.

hkloon said...

Hi Mr Chan,

1) It takes me a bit of time to digest the 9 wave you mentioned, but think i understand now hopefully.. for wave 7 + 9, can I say they should equal wave 1 (6500 to 10700 = 4200)? which means if current level stays at 15800 at closing, it should be about 20000 when bull ends? because wave 3 is already the longest for dow jones...
2) I missed that FBMKLCI from Dec 2014, when it rises back up, seems like it was doing only a 3 wave up (not impulse wave) until 1863... and met resistance there... and it actually was following DOW Jones which began to correct in May 2015...
3) i like the many scenarios you put out for bullish case and bearish case
4) A small request - Could you do a wave analysis for SIGN? Signature international berhad?
many thanks for the teaching...

Chan Kwang Yew said...

January 2013 high of 90 sens is wave 1, wave 2 ended in Sept 2013. wave 3 ended at the beginning of this month at Rm 3.16. Wave 4 in progress.

hkloon said...

Hi Mr Chan, supposed that wave 4 ended around 1.80, for wave 5, will it be a truncate wave 5 or there's possibility to reach a new high? Many thanks... or is it smart money has already exit this counter? how can one tell?