There' s not much to add to our previous analysis. We believe we are going down in a C wave, last leg of a three waves affair that should bring the index down to 22500 where we have equality between both active legs. If the market keeps following our idealized scenario, expect the Dow to chop its way down towards that target tiring everybody in the process while setting up the stage for the next rally.
Equality between waves is cute but it is not a certainty. Minimum requirement for wave C of a ZigZag is the move lower then wave A. Then we have lower support at rising trendline. Closing below would mean down to 21700 and if necessary we see some support in the 20500-21000.
If we are not bear enough and the market decides to collapse under our feet, there's very strong support at the 16000 level.
But we don't think we will get there. At the panic low in early February we mentioned we thought the coming rally would be a B wave that could be all over the place and more difficult to label. Another characteristic often seen in B wave is divergences between indices. Some are stronger than others. We sure got that. Look at the XMI versus the NASDAQ or Rusell 2K. That is a major divergence. Further more, the NASDAQ make new high from the February low in 3 waves highly suggesting we have an expanded flat in our hand with current decline being wave C that should bring the index like the DOW below its February low.
We will publish a chart of the NDX probably on Tuesday.
Thanks for reading
Equality between waves is cute but it is not a certainty. Minimum requirement for wave C of a ZigZag is the move lower then wave A. Then we have lower support at rising trendline. Closing below would mean down to 21700 and if necessary we see some support in the 20500-21000.
If we are not bear enough and the market decides to collapse under our feet, there's very strong support at the 16000 level.
But we don't think we will get there. At the panic low in early February we mentioned we thought the coming rally would be a B wave that could be all over the place and more difficult to label. Another characteristic often seen in B wave is divergences between indices. Some are stronger than others. We sure got that. Look at the XMI versus the NASDAQ or Rusell 2K. That is a major divergence. Further more, the NASDAQ make new high from the February low in 3 waves highly suggesting we have an expanded flat in our hand with current decline being wave C that should bring the index like the DOW below its February low.
We will publish a chart of the NDX probably on Tuesday.
Thanks for reading