DJIA bulls have not been in a good shape during the last two months, to say the least. The index registered its all-time high of 26 617 on January 26th, 2018, but has been in tailspin ever since, falling to as low as 23 360 on February 9th. After a swift but short-lived recovery to 25 800, the bulls quickly ran out of steam again, allowing for another selloff to 23 509 so far.
Despite the negativism surrounding the stock market these days, our last post about the Dow Jones Industrial Average, published on February 6th, suggested that even though a decline to 23 000 is likely, the uptrend remains in progress and 27 000 is still there for the taking. Less than two months later, the hourly chart below appears to confirm the positive outlook.
The hourly chart visualizes the wave structure of the plunge from 26 617. As visible, it looks like a simple (a)-(b)-(c) zig-zag correction, where wave (a) is a five-wave impulse, while wave (c) is so far developing as an ending diagonal. Put into Elliott Wave perspective, this chart indicates that once wave “v” of (c) breaches the bottom of wave (a), the three-wave corrective pullback from 26 617 would be complete and the final phase of the larger bull market should begin.
In conclusion, despite two months of slaughter in wave 4, DJIA bulls are still alive and the upcoming wave 5 would make them feel stronger than ever… Just when they are most vulnerable.
