Dow Industrials

Summarizing Our Dow Jones Trend Forecast

Published 5th December 2017 & validated 16th December 2017

Our Dow Jones forecast is a spike to the downside before the index resumes its uptrend. Mid term we expect some sizable and bumpy corrections ahead in 2018. They will be significant but still countertrend to the Dow’s main path to the upside. All in all we think that a trading approach will outperform a buy and hold strategy in US American blue chips over the coming decade. US equities appear to be in maturing, but not incomplete, secular trends.

Short Term Trend

Published 12th December 2017 & amended 16th December 2017

We have a similar situation in the Dow Jones as we find in the S&P 500. Any potential version of wave iv° looks too short to be complete right now. Moreover a closer look at wave ii° shows that we should expect wave iv° to be relatively shallow and complex due to alternation guidelines. We forecast wave iv° to be right around the corner.

We currently see alternation between waves (ii) and (iv). Moreover wave iii° is equal to a fibonacci 161.8% relationship of wave i°. The black count case clearly meets many of elliott’s rules and guidelines.

 

We expect the entire correction to be between the 23.6% and 38.2% fibonacci levels of wave iii°.  This means a 2%-3% drop before the uptrend is resumed. For the moment we let the market do its work and let wave action play out.

Please refer to our current short term S&P 500 forecast for a much more technical explanation. The S&P & DJIA are highly correlated.

Long Term Trend

Published 31st October 2017 and validated 16th December 2017

Medium term we are most likely in cycle wave I, which started at the March 2009 bottom. We believe that it is just wave I of supercycle wave (V) because it looks way to small in relation to wave (I) as of October 2017. Unfortunately we cannot publish our longer charts for the Dow Industrials. However, we have published a longer dating chart for the S&P 500, which is similar. The start of supercycle wave (I) goes back to the mid 1800! It takes further years and upside price action to get a right look. Moreover it also fits our cross-equity market conclusion, which sees most European and Asian markets as bullish over the next decade. An inflation scenario may potentially play out and fit to the environment.

Supercycle wave (IV) has the right look, alternates to wave (II), and retraced more than a fibonacci 38.2% on a log scale. The retracement in wave (II) was very steep and a shallow wave (IV) is expected by following the elliott wave guidelines. The wave action in between fits neatly together to an extended supercycle wave (III).

Technical Analysis