The Bear is here to stay

Dow (23,185)

Dow plunged on Thursday by 10% or 2,353 points from Wednesday closing level of 23,553 to 21,200 level. That is the fifth biggest all-time Dow loss following behind the October 1987 'Black Monday' crush and the 1929-1931 'Great Depression'. this 10% loss is ever bigger than that recorded during the 2008 'Subprime Financial Crisis' that ranked No. 10.

'The Black Monday' on 19 October 1987, Dow dropped 22.61% that is very much bigger than the 10% drop on Thursday.

From its peak of 2,722 to the 'Black Monday' low of 1,738, the drop was 36.15% and the whole correction took only 2 months and with this single day 22.61% shake-out, Dow ended its correction with a V-reversal.

From the long-term chart we can see that even though the 'Black Monday' drop of 22.61% is ranked No. 1 as the biggest all-time loss for Dow, but the whole correction is of a lower degree correction and the duration is very short, 2 months only.

The highest degree correction is still the 1929 'Great Depression' supreme wave (II) 89% correction. The current correction is one degree lower super wave VIII correction of 50%. This figure of 50% is based on the average magnitude of 52% for super wave II, 42% for super wave IV and 54% for super wave VI.

At this moment Dow is forming the wave A of its super wave VIII. Looking at the 30-minute interval chart, the 1,985 points (+9.36%) rebound on Friday is only the wave iv of A. Wave v is expected to take place next week. Still a long way to go to complete the super wave VIII as the story of Covid-19 may be half-way through for China but the story has just started for Europe, the US and the Middle East.

FBMKLCI (1,344)

For KLCI, since 2014, it has been forming its mega wave (6) correction.

The sharp 75 points (-5.28%) plunge on Friday is the mini wave 7 of its wave (iii) of C of (6). If  I used the magnitude of correction for the mega wave (2) and (4) of 45%, the mega wave (6) is likely to end at 1,050 level.

But If Dow is going for a 50% pullback, it would be more likely for KLCI to have a super wave IV correction instead of a mega wave (6) pullback.  Super wave IV is likely to retrace at least to the mega wave (4) level of 829 for a 56% correction.

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