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If the has topped, then that’s water underneath the bridge. Wanting ahead, anticipating the subsequent few months and years issues. Or, as they are saying, “forewarned is forearmed.” Top-of-the-line methods and instruments to do this is by assessing the previous and making use of the Elliott Wave Precept (EWP). I’ll decide the DJIA’s big-picture EWP rely on this article utilizing value information since 1897. I’ll apply the EWP’s guidelines, patterns and previous corrections to anticipate how this potential present bear market might unfold logically.
Determine 1. Dow Jones month-to-month candlestick chart with detailed EWP rely
Did Tremendous Cycle III Prime? If So, How Will Tremendous Cycle IV Develop?
The notorious 1929 prime and subsequent crash into the 1932 low are by most ellioticians considered Tremendous Cycle-I and II, respectively. See determine 1 above. In additional element, SC-II was a zig-zag. The following 5 waves rally into the 1937 excessive was the one diploma decrease Cycle-1 wave. C2 bottomed in 1942 and was additionally a zig-zag. (Blue) Major-I topped in 1945 (sure, the market rallied 150% throughout World Conflict II, because it already sniffed out Germany would lose, aka the markets are forward-looking), and P-II was one other zig-zag. We will see a nine-wave advance into the 1966 excessive from that low. Then, the index went by means of an nearly decade-long sideways consolidation. In EWP phrases referred to as an irregular, expanded flat wave (IV). Flat corrections include three waves: A-B-C. The inner construction of every wave is 3-3-5. In bull markets, the B-wave of an irregular flat makes a brand new all-time excessive.
From the EWP, we all know that in an impulse, 5 comes after 4, and the market launched into P-V, which topped in 2000 to finish C3. One other nearly decade-long sideways consolidation occurred: Cycle 4. This wave was additionally an irregular expanded flat, with the 2007 all-time excessive the B-wave prime. Cycle-4 bottomed in March 2009, and since then, we now have come to get pleasure from C5 of SC-III. The index went by means of two extra flat 4th waves between then and now. The smaller one (2015-2016) was a daily flat, whereas the bigger one (2018-2020) was –as soon as once more– an irregular expanded flat. The “COVID crash” was the C-wave of that flat. The following rally from the March 2020 low was Major-V of Cycle-5 of Tremendous Cycle-III. The latter might now have topped. This implies Tremendous Cycle-IV is now underneath manner.
Given the “rule of alternation” within the EWP: “If Wave 2 unfolds as a easy ABC correction, chances favor Wave 4 is extra more likely to unfold as a fancy correction. And vice-versa, if Wave 2 is advanced, then wave 4 will seemingly unfold as a easy ABC sample.” On this case, I established all the twond waves (SC-II, C-2, P-II) have been easy zig-zags and all fourth waves (P-IV, C-4, M-4, P-IV) have been advanced flat corrections. Thus, based mostly on this sample, it’s logical to imagine the present SC-IV wave may also be of the advanced sort: a flat. At this stage, it can’t be identified if SC-IV will grow to be an irregular expanded flat, which means wave-B of IV will make a brand new all-time excessive or “solely” a daily flat (A=B=C). Nonetheless, based mostly on the historic proof, it is going to seemingly grow to be an irregular and expanded flat.
In addition to, if SC-IV follows the prior 4th waves paths, I count on SC-IV to ideally backside between $14,400-$18,800. Based mostly on the timeline of those earlier 4th waves, I count on SC-IV to final probably as much as a decade. In additional element, wave-A of SC-IV has then simply gotten began, and the primary leg decrease (wave-a of A) ought to wrap up quickly, to be adopted by a multi-month relieve rally/lifeless cat bounce (wave-b of A) earlier than the subsequent leg decrease begins (wave-c of A).
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