Dow dropped 713 points or 2.6% in the last three days. Is this confirmed to be the starting of the more than 20% wave E correction?
Dow is a bit tricky because its major wave 8 takes the form of an 'expanding triangles'. However if we look at the Russell 2000 - an index for small caps - which typically related to economic growth, its major wave 8 is a simple 3-3-5 ABC corrective wave. Its major wave 7's peak coincide with Dow's wave B of 8.
At this moment it has started forming its wave iii of C with 3 days of drops (-3.3%) in a row.
If the magnitude of wave C is the same as that of A with drop of 25.7%. wave C is likely to end at 1,200 level.
According to Gary Shilling, an America financial analyst, known for correctly predicting bubbles like the sub-prime of 2008, he said in June, "I think we're probably already in a recession, but I think it will probably be a run-of-the-mill affair, which means real GDP would decline 1.5% to 2%, not the 3.5% to 4% you had in the very serious recession."
From the Dow's 119-Year long term chart, after completing its major wave 8, there is still a major wave 9 that can bring Dow to 34,000 level to complete its super wave VII.
FBMKLCI (1,626)
KLCI continues to zig-zag downwards to complete its wave C of (6).
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