close icon

DJIA And Why You Should Not Worry… Yet

The Dow Jones Industrial Average(DJIA) is probably the most important benchmark stock market index in the world. As such, every move it makes is closely observed. If the move in question is a little bigger and points south, panic is usually not too far away. In this material we will use the Elliott Wave Principle, in order to see, if we should start worrying too. The chart below shows how DJIA has been developing since the 2007-2009 financial crisis.
djia 20.1.16
The theory states that trends, regardless of their degree, move in five-wave sequences, called impulses. Within an impulse, waves 1,3 and 5 are motive and travel in the direction of the larger trend, while waves 2 and 4 are corrective and travel against it. As the weekly chart of DJIA shows, the whole recovery since 2009 reminds us of an impulse, whose fifth wave is missing. We suppose the current weakness is wave (4). Typically, fourth waves terminate near the 38.2% Fibonacci retracement level. That is why we believe the Dow is headed for another touch to this key level, before the bears give up. In other words, the index might even fall below the 15 000 mark, but instead of panicking, investors should prepare for the return of the bulls in wave (5).

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

DAX 30 Adds to Global Recession Fears

The German DAX 30 index has been declining since early July when it reached 12 656. Last week’s news that the German economy shrank by 0.1% in the second quarter only added to global recession fears. The benchmark index of Europe’s largest economy fell to 11 266 on August 15th. Are investors’ concerns warranted? Or…

Read More »

Dare to Guess the Best Stock Market Index of 2019?

The first half of 2019 saw stock market indices around the globe rebound sharply. In the U.S., NASDAQ, DJIA and the S&P 500 are up 22.7%, 14.8% and 18.9% since the start of the year, respectively. In Europe, the German DAX and France’s CAC 40 both climbed 17.8%, UK’s FTSE 100 surged by 12% and…

Read More »

Is the Dow Jones Transports Signaling a Recession?

The Dow Jones Industrial Average usually gets the most attention, but it is the Dow Jones Transports that often gives the early signs of trouble. Transport and delivery companies are the first to find out when there is a slowdown in global trade. And in some cases, a slowdown evolves into a full-blown recession. Despite…

Read More »

DXY Bulls Should Worry as Bearish Evidence Abounds

The bulls have been in control of DXY during most of 2018 and gradually conquered more land in the first months of 2019, as well. The USD index recovered from its February 2018 low of 88.25 to as high as 98.33 last month. The bulls can really be proud with the total gain of over…

Read More »

NASDAQ Bulls’ Resiliency has its Limitations

The NASDAQ 100 index closed at a new all-time high of 7826 last week, powered by strong Q1 earnings reports by Amazon and Microsoft, among others. The index is up by 650% from its 2009 low and by 884% since the bottom of the dot-com crash in October 2002. Looking at than phenomenal growth, one…

Read More »

Nifty 50 to Fall Below 10 000 Level Again?

It has been almost five months since our last update on the Indian Nifty 50 index. On September 25th, the benchmark was trading around 11 000, following a pullback from the all-time high of 11 760. Still, the Elliott Wave analysis below suggested it was too early to buy the dip. The daily chart of…

Read More »

A Special Letter about the State of the Stock Market

Dear Fellow Elliotticians Most major stock markets have been in a bull market for almost a decade. Unfortunately, after last week’s selloff it is now evident that this bull market is over. The S&P 500 is down 17.8% from its all-time high reached three months ago, despite a still strong economy and relatively low interest…

Read More »

More analyses