The Chart du Jour
There is no denying that the recent advance of the DJIA has taken place in a five-wave format. If this is the beginning of a new impulse wave to the topside, bulls would argue that this is a Wave 1 of V, and that after a Wave 2 retracement, we will be off to the races once again.
Our view however -- taking into account some of our prior analysis in "A Thirteenth Century Mathematician and the Current Rhythm of the DJIA" and "Three Peeks and a Domed House - Revisted" (see Earlier Articles) -- is that we are most likely completing the A Wave of a more complex A-B-C 2 Wave corrective rally. As we suggested in our Chart du Jour of March 22, the Dow has bought itself some time, but probably little more. We have sketched out in the chart below a possible Elliott wave path from here. The definitive evidence that our count is correct as opposed to the more bullish one referred to above will of course not come until after the upcoming B-C part of the 2-wave rally is finished, and we see more impulsive downside price action once again.
We also offer today, the following Fibonacci Cycle time chart basis the S&P. Measuring from low to low, the rhythm here suggests to us that May 18 should be another low. Such a date would leave the minor lows of January 6th and February 28th as .382 and .618 respectively of time measured back to the October 18, 1999 low. May 4-5th is of course also a period of some cycle importance as well (see December Cycle Report), and because of this, we could envision building to a "crash like" environment by that time such that May 18th. would still be late enough afterwards to represent a tradeable low.
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