close icon

Dow Facing Another “STOP” Sign?

The last time we expressed our concerns about the Dow Jones Industrial Average was in “Dow Above 17 000 Again, But…” . In that material we warned you about an ending diagonal forming on the daily chart. To those, who use the Elliott Wave Principle, this pattern signals for a violent reversal ahead. You can see the previous diagonal in the Dow on the chart below.dow jones 17000 update
As visible, we were expecting an unpleasant surprise for the bulls, once wave 5 of the diagonal was over. “Another new high should be expected, probably around 17 300, but then the bears should take control of the situation.” What happened next, got a lot of people terrified. In less than a month the Dow Jones Industrials fell by more than 1500 points, from 17 362 to 15 850. Today, DJIA is trading close to 18 000 and the scary days seem to be forgotten. However, it looks like the charts are once again trying to warn us for a danger ahead.
dow jones daily 19.3.15
It appears there is another ending diagonal, which makes it two in a row. Does this mean we should prepare for the same development? Yes. In fact, the sell-off could be even bigger, because this is a larger degree pattern. The big picture count explains it.
dow jones 19.3.15
According to the theory, market trends move in five-wave sequences, called impulses. The Dow has been in a strong rally ever since March 2009. But this impressive advance does not have a complete five-wave structure yet. It consists of only three waves, labeled (1)-(2)-(3). If this is the correct count, wave (4) to the downside should be next. Usually, fourth waves retrace back to the zone of the previous fourth wave. If we apply this guideline to the current situation, it turns out there is a good chance for a decline of more than 2300 points in wave (4).



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