I’am going to look at a bunch of charts today with an interesting look at the DOW JONES GLOBAL INDEX, HEAD AND SHOULDERS PATTERN and comparing it to the Canadian TSX composite index.
Could the Dow Jones Industrial Average have a bullish flag in the making? Just looking at all of the possibilities. Remember this is the big picture. If this was a bullish flag in the making the B wave would actually be wave 5 and the C wave would actually be wave A.
Looking at it from an Elliott wave perspective, that’s the way it is. In the chart above, the C wave is actually wave A. We starting to finish Wave B and the next wave is Wave C.
Wave C is usually the same length as wave A. I’am not going to get into the whole Elliott Wave Theory here, it would take me too long, but, what I want to say is… we’re in a Grand Super Cycle and when wave 5 is complete, the price goes back to the previous wave 4. The previous wave 4 is the 1970′s consolidation.
Personally I can’t see the Dow Jones Industrial Average or any other index looking like the Shanghai Stock Exchange Composite Index for a long time to come. But let’s imagine for a moment that central banks around the world printed 1 quadrillion dollars over the next year and we started a break out on the Dow Jones just like the Shanghai Index and over 2 years the Dow Jones went up 500% to 60000 or so. The unfortunate thing is, for the buy and hold crowd, they’d be screwed. The world would be worse off than what it is now even though the market went up to 60000 and then right back down to where it is now. The chart below shows you what happens when the market goes up fast…well…it comes down fast too. When you look at a 100 year chart of the Dow Jones, we already had our steep climb from 577 in 1974 to 14164 in 2007.
The Dow Jones has gone up 24.55 times the value it was in December 1974 over 33 years ( a generation and a half). There is a rule of thumb that the correction is 1/3 the time span of the impulse wave. If this is true, then…the depression we’re in is going to last till 2018, with a price target on the Dow at around 1000.
You know…there are tonnes of metrics out there, the thing to remember here is…think for yourself, do your research and don’t do what the mainstream media preach and above all else, don’t do what the government asks. The government is the biggest waist of energy there ever was. My dad told me when I was a kid “when the government is promoting a business idea, DO THE OPPOSITE”.
Look at the similarities between the Dow Jones Global Index and the Canadian TSX composite index. Almost freaky EH!
Now, let’s compare two charts below…the Shanhai Index and the Dow Jones Industrial Average. What I was looking at here was a bullish flag formation in the two charts. Basically…I’am doing a what if scenario. One thing I also say to myself, and I say it often is the market is irrational and anything can happen, expect the unexpected. Why? simply because when you hear about what EVERYBODY is doing and saying on mainstream media…you want to take the opposite side of the trade. I don’t what’s going to happen in the future any more than the next guy. I use technical analysis with my Swing Trading Forecast Model and try to obey the rules…that’s it.
Right now…the HUI Index is the only thing I’am long in…having said that…stocks are stocks and things can go south pretty quick, however, as scary as things might be…you have to trade the patterns.
The Weekly Gold Chart above…oh the possibilities. The daily chart (not shown) shows a tiny breakout. The weekly chart doesn’t show it. I want to see a big white engulfing, weekly candle break the descending resistance line, that would confirm gold going to $2070.00 based on trading triangles. If we don’t break that descending resistance line look for the alternative shown in the chart above. Notice how the target in February aligns with a pivot point date sometime at the end of February.
A bullish flag to the market is like a turbo charger (more like nitro) to a motor, it takes off with a burst. The chart above is the result of the ABC correction in the Shanghai market. The market went up and came back down just as fast, interesting.
To summarize…I don’t like the head and shoulders pattern for the DOW JONES GLOBAL INDEX.
These are the pivot point dates to put on your calender…these dates should be the big ones. There are minor dates slated, however, the dates below should knock your socks off.
- September 28, 2012
- December 4, 2012
- 3rd week in February, 2013
If the DOW JONES GLOBAL INDEX, HEAD AND SHOULDERS PATTERN doesn’t fulfill itself, is it possible we see something similar to the Shanghai Index from 2006 to 2008. That would really be something.
Charts courtesy of stock charts.com