close icon

This DJIA Pattern Screams “Abandon Ship”

If you have read our article about DJIA’s long-term prospects, you know that the bulls have been swimming in very deep and dangerous waters for while now. The shorter-term outlook, however, suggested that a new all-time high should be expected before things get complicated. This is the chart we published back in August, while the DJIA was trading around 18 610.
djia present
By applying the Elliott Wave Principle‘s rules and guidelines to the weekly chart of the Dow, we came to the conclusion the index was in the final wave (5) of the post-2009 uptrend. This wave (5) looked like an ending diagonal in progress three months ago, since its waves 4 and 5 were still remaining. Today, it looks like a complete ending diagonal. It was only yesterday, when wave 4 of (5) bottomed out at 17 477 and gave the start of wave 5, which took the index to a new record of 18 769 so far today. The updated chart below visualizes the DJIA’s progress.
The five-wave impulse the DJIA has been drawing during the last seven years seems complete now. It will probably manage to add a few more points to its value, but from an Elliott Wave perspective, this is definitely not the time to join the bulls, because every impulse is followed by a three-wave correction. In this case, a three-wave decline is the least we could expect. Furthermore, waves (v) of 3, 5 of (3) and (5) are ending diagonals, suggesting the bulls have been struggling to keep pushing the prices higher since 2013 and they are extremely exhausted now. Ralph Nelson Elliott observed that ending diagonals are usually followed by a “swift and sharp” reversal. In other words, if the charts could talk, “ABANDON SHIP” is what these patterns would be screaming right now.

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