Dow (25,383) - High Volume on Friday

Dow dropped 17 points on Friday, a negligible drop but with high volume of 527.62 million. It is interesting to note that 30.9% volume of the day, 163.26 million was executed during the last 5 minutes of Friday's trading session.

The candlestick for the last 5 minutes is a green candle, it opened with a gap down at 25,366 level but closed higher at 25,383 level. There were big sellers (163 million) started to dump shares at 15.55pm creating a 'gap-down' but there were equally big buyers emerged to not only able to absorb all the selling, the buyers were able to buy their way 'up' to have a green candlestick for this last candlestick of the day. It will be interesting to see how deep is the buyers' pocket in the next trading session on Monday.

I have been looking for big volume of at least 550 million or 600 million and a surge in Dow with dynamic trading to turn the impossible mega wave (3) scenario into a reality. The big volume and dynamism took place during the last 5 minute of the trading session on Friday minus the surge in price forming only a short, very short-body green candlestick, sigh!

If the buyers do not have enough financial resources and if their support during the last 5 minutes on Friday is a 'desperate support' and had used up almost all their bullets, the buying will fizzle out next Monday and Dow will remain in its wave B formation with a weak low volume mini wave 5 run-up.

However if the buyers can continue their active buying support into next Monday's trading session with dynamism and high volume and a surge in price, then the run-up could be the minor wave iii of mini wave 3 of wave (iii) of major wave 1 of mega wave (3).

Pray hard. Amen.

Dow (25,545) - Next Few Days very critical

Dow added another 553 points (+2.21%) on Wednesday on top of the 530 points  (+2.16%) gain on Tuesday. It is a total of 1083 points or 4.42% within 2 trading days. Volume also improved by 17% from an average volume of 360 million to about 420 million but is still well below my target of 600 million.

If I am still talking about a wave B formation, Dow is at the minor wave iii of its mini wave 3 of its wave (iii) of B. It may end slightly higher at around 27,000 level. After that will be the wave C correction that is likely to bring Dow to the 17,000 level or lower.

What about that fundamentally looked impossible mega wave (3) scenario that I mentioned previously that is fundamentally impossible but technically possible? Any fundamental analyst based on the current and projected economic and political and Covid-19 pandemic developments would term this scenario as absurd and laughable.

But a pure technician of chart analysis that stayed in a dark room and looking only at the chart and believing that all he needed to know outside of his room are already reflected in the chart would include this as one possibility subjected to confirmation. The indicators that can confirm this scenario are the coming chart form and volume. Since Dow is at the minor wave iii of its mini wave 3 of its wave (iii) of (3), a wave iii of 3 of (iii) of (3) has to be very very dynamic, explosive and with very very high and unmistakable volume, failure which its has to be a B.

Keep your fingers crossed.

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Dow (24,465) - B wave continues

On news of effectiveness of a potential vaccine for Covid-19, Dow future at this moment reaches 24,942, up 518 points or about 2%, that is 235 points above its mini wave 1's high of 24,707. If Dow can open its Tuesday session at around 24,900 level, then Dow is forming its mini wave 3 on its way to complete its wave (iii) as well as its wave B.

By early June, Dow is expected to complete the wave B of its super wave VIII. Wave C is expected to drop at least 38.4%, same as that of its wave A's drop. Assuming wave B can reach a high of 26,000, 38.4% of that is about 10,000. That will give wave C a possible low of 16,000.

The very optimistic option of mega wave (3) formation looked very very unlikely at this moment.

I am looking for a dynamic run-up with high volume exceeding 500 million. So far the Dow has been half dead with an average volume of 360 million except on May 18 when Dow gained 912 points (+3.85%) with volume of 484 million.

Until there is an euphoric run-up with high volume, It is very likely that Dow will finish its wave B of VIII in early June and will start its wave C that will ultimately end with a minimum drop of 38.4% or 10,000 points.

Be careful, June is only a few more days away.

Mirage from Kitaro

Dow - Wave B ?

Dow (23,685)

If the wave (ii) of B is a simple a-b-c, Dow has started its wave (iii) of B.

But it is also possible that wave (ii) may take the form of an a-b-c-d-e formation.

For the other optimistic option of mega wave (3) formation that I mentioned previously, I would prefer to leave it aside for a while until Dow can have a powerful and dynamic wave (iii) with a very huge volume.

Dow (23,764) - Still on its B wave

Dow dropped 457 points (-1.89%) on Tuesday to take the course of an a-b-c for its wave (ii) formation. Wave c is likely to end around 23000 level.

Based on the current social, economic and political situation especially the tension between China and the US, Dow is more in favor for a wave B formation. The next wave (iii) climb is going to be a weak run-up with low volume for this wave B formation. It is likely to end somewhere between its previous high of 24,764 and 25,500 before the damaging wave C of super wave VIII starts.

Another seemed to be impossible option at this moment is the mega wave (3) of the super wave VII formation for Dow that I have mentioned before. Very very unlikely but technically possible.  

Stock market is always full of surprises. Who can foresee the Covid-19 black swan before it arrival. Exactly 3 months ago on February 12 when Dow set an intraday historical high of 29,568, who can expect to see in the US the Covid-19 infected cases can reach 1.4 millions with 83,400 deaths by May, and unemployment rate exceeding 20% with 26.5 millions job lost.

Who would expect Warren Buffett, who told Yahoo Finance editor-in-chief Andy Serwer in March, "I won't be selling airlines stock," (after Berkshire Hathaway purchased an additional 976,000 shares of Delta Airlines at about $46 a share on February 27), told Berkshire Hathaway shareholders on May 2 that he had sold all of the company's airlines stocks (Delta, Southwest, United and American Airlines).

This is why the market can survive for more than 100 years. At anytime under any condition whether the sentiment is bearish or bullish, there is always a buyer and a seller to complete a transaction.

  

Crude Oil (WTI) (US$24.30)

It appeared to me that crude oil (WTI) has completed its wave E on 20th April when it recorded an intraday low of negative US$-40.32 a barrel. The current rebound is likely to be the wave X of its waves ABCDE-X-ABC or waves ABCDE-X-ABCDE formation in view of the long-term bearish demand for crude oil.

It is close to impossible that wave E is the end of the major wave (2) corrective wave because it is impossible that demand can drive the price of crude oil to above US$200 or more a barrel unless the USD has started its slow long-term decline when it slowly loosing its status as the world reserve currency. But the US will not allow that to happen to take away its privilege of printing USD freely to finance its spending. The easy way out to prevent the USD from declining is to start a war with any nation that poses threat to the US interest.

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Dow - Dead Cat Rebound about to end

Dow (24,331)

Dow moved up strongly on Friday but with the lowest volume recorded since March 23, the starting of the current up trend from 18,213 level.

Dow is likely to complete its wave B within next week.

It is also possible that Dow may take a slightly longer time to complete its wave B as shown below.

The shrinking volume so far is indicating that Dow is heading for the wave B of its super wave VIII formation. If wave C were to have the same magnitude as wave A that dropped 38.4%, super wave VIII might end somewhere near the 15,600 level.

Ray Dalio, an American billionaire hedge fund manager that founded 'Bridgewater Associates' said on Wednesday, "This is not a recession, this is a breakdown. You're seeing the same thing that happened in the 1930s".

During the '1930s great recession' Dow dropped 89%. From Dow's February record high pf 29,568, a 89% drop means it will drop to around 3,250 level!!! But personally I don't think it can happen during a super wave VIII correction. It is more likely to take place after the completion of the super wave IX when Dow goes for its grand super wave (IV) correction.

No doubt that last Friday volume is the lowest during the current up trend, but for wave b of (ii), it is perfectly alright to have the lowest volume. But if the volume continues to shrink during the wave (iii) run-up, then Dow is forming its wave B as mentioned above.

But if the coming wave (iii) run-up can turn into a dynamic surge with very powerful and unmistakable volume, then the seemingly impossible option of a mega wave (3) formation can become possible.

But it need volume, big big volume, failure which, look for another 38.4% down.

Dow (23,723) - Wave B rebound is ending

Dow dropped sharply on Friday on Donald Trump threat to impose tariffs on China in retaliation for the Covid-19 pandemic. Investor sentiment was also affected by the unemployment figure that reached 30 millions. Dow dropped a total of 910 points (-3.69%) in two days to end its sub-wave iii in a timid way.

Next week, if there is any run-up with average or lower volume and if Dow is unable to cross the 25,000 level, we may witness the end of the wave B or the end of the 'dead cat rebound' or the end of the 'sucker wave'.

If the following wave C were to follow wave A with a 38.4% drop, wave C is likely to end somewhere near the 15,300 level for a close to 10,000 points drop.

Another possible outcome as shown below will give the Dow slightly longer time to complete its wave B. The wave (iii) in this case is likely to be a weak run-up with average or below average volume, a 'half-dead' run-up to end the wave B.

But if the wave (iii) run-up is dynamic with very very high volume, then the mega wave (3) scenario will remain alive. It all depends on how successful is the reopening of the economic activities, how well is the Covid-19 being controlled and how well is Donald Trump behaved.

If Trump were to continue with his war cry against China in order to create a common enemy for the American to hide his weakness in his handling of Covid-19 and to improve his popularity in his run up to the presidential election, mega wave (3) scenario looked very unlikely at this moment.

Watch out for Trump unpredictable action, escalating trade war and tension at South China Sea and a possible Covid-19 second wave caused by the reopening of economic activities.

Ultimately sometimes in the future, I expect the Dow to collapse due to the high US national debts and the ultimate breaking down of the US dollar (no more unlimited printing of USD). But I expect that to happen only after Dow has completed its super wave IX that also marked the end of the grand super wave (III). The grand super wave (IV)'s correction/pullback is going to be of the magnitude of that for the grand super wave (II) of 89% during the 1929-1933 Great Depression.

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