The Dow Jones Industrial Average Breaks Support for the week ending October 12, 2012. The charts are showing the possibility of a drop on Monday / Tuesday, the markets should move higher Wednesday but don’t look forward to new highs any time soon, if at all for a very long time.
Notice how the price has dropped below the support line, that’s not good. It also has a double top, that’s not good. It might be hard to see in the chart but it looks like a 5 wave wedge unfolding, for the short term that’s good, however, for the long term that’s not good. I say that because according to Elliott Wave Analysis you only see 5 wave wedges in the final wave of an impulse wave or at the end of wave C. The decline we have witnessed for the month of October, 2012 is not wave C, it’s clearly a 5 wave impulse wave DOWN and we’re in the final fifth wave of our first wave down (the small one, minuette). I’ve looked at enough charts in the last 25 years to know a set up when I see one, and this is the mother of all setups.
So…let’s look at the Dow Jones Daily Chart…the next pivot point is November 9 /13th, 2012 and you can see the area marked in the chart. I’am not sure if the market is going to trend higher up till then or not, but according to my model, the November 9th / 13th should be a pivot point to remember. You’ll also notice the Stochastics Momentum indicator diverges from the price.
The weekly chart of the Dow Jones shows the other support line and the massive white line which is the resistance line going all the way back to top in 1937 and the top in 1966 . We are still in bullish territory, however, I don’t like the setup. I want to be optimistic, but i can’t, not right now.
The Dow Jones Industrial Average 100 year chart shows you that long term resistance line.
Could the scenario in the Dow Jones 100 year chart above happen…anything’s possible…that’s a 400% pop in only 4 years. The inflationists would stand for that. Can you imagine paying $10.00 for a loaf of bread or $20.00 for a gallon of fuel or 2-300 dollars for a single share of Walmart stock. Never underestimate the power of the market. I personally think the market will go the other way…down…for reasons I mentioned earlier, purely technical, not emotional or fundamental. The Dow Jones 100 year chart above is a picture of everyone’s emotional decisions on the whole planet…everyone’s hopes and dreams…in a picture and right now we are sitting at the median line tedering one way or the other, up or down.
That’s it for now…I hope the charts of the Dow Jones Industrial Average above give you another perspective on what is going on in this whack y world. I’am not here to say the world is going to fall apart…just the opposite…there is always huge potential. For the last couple of weeks I’ve been trading currencies rather than short the market, perhaps next month I might short, for the short term there is very little upside or down side in my opinion but the fire works are going to explode in the not distant future.