The fundamentally impossible but technically possible mega wave (3) option that I have been keeping at the back of my mind seemed to be the most likely option now. From close to near zero probability in March, I even find it radiculous to mention about this possible wave count at that time, its probability slowly increase with the injection of more money by every nations.
The US has its unlimited QE programme (unlimited money printing). European Union latest 750 billion euro stimulus plan came out last week. In May the Japanese Government approved a fresh 31.9 trillion yen budget to fund the proposed 117 trillion yen economic stimulus programme. The Chinese fiscal stimulus package is worth 3.6 trillion yuen (US$506 billion). With so much money flowing around, where can they go? They cannot be left idle in the banking system.
Dow was having its sub-wave ii correction in the last few days. By next week if Dow can move above the 27,005 level, I can safely forget about the super wave VIII correction that I have been mentioning all this while since the March's bottom of 18,213.
Dow took 11 years from March 2009's low of 6,469 to February 2020's high of 29,568 to complete its mega wave (1) with a gain of 357%. Since, in general, wave 3 cannot be shorter than wave 1, technically the mega wave (3) needs to go up by at least 357% from its mega wave (2)'s low of 18,213 level within the next 10 to 12 years. A 357% gain will theoretically put mega wave (3) to at least 65,000 level !!!
Back to the Dow current situation, it closed Friday session gaining 114 points to 26,428. Until Dow is able to move above the 27,005 level, another about 600 points to go, or 2.3% to go, I still cannot knock out the super wave VIII option on paper.
However as early as mid-May 2020, a famous Malaysian finance blogger, Salvador Dali, in his article 'The Market's Disconnect to the Real Economy and the Glove Factor' (click for the full article) published on June 6 in his Malaysia-Finance Blog, he mentioned that he turned bullish on 18 May because of reasons mentioned in his article.
Basically he compared the Covid-19 downturn to that of the '1930's Great Depression' and the '1998 Asian Financial Crisis' economic collapse due to bubblelicious financial extravagance. The current pandemic struck hard and fast with escalating death figure that triggered 'social distancing,' 'lock down', and near zero physical social activities and business activities (except on-line business). With the amount of money injecting into the market through various stimulus packages, with fund managers holding US$591 billion waiting at the sideline, with dismal interest rate, it appeared possible that the bull is ready to run until someday we have reached the stage of 'irrational exuberance' as mentioned by Alan Greenspan during the dot.com bubble in the late 1990's where the Nasdaq Composite fell by 78%.
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