Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Inflection Point

Stock-Markets / Stock Markets 2011 Jul 14, 2011 - 01:41 PM GMT

By: Tony_Caldaro

Stock-Markets

For those new to the blog we would like to restate something we did during the last bull market. The SPX/NDX can offer confusing patterns. Their futures contracts are heavily traded which causes volatility. In fact, occassionally a wave does not appear where it should, or a wave occurs that shouldn’t. How do we know? The DOW.


The DOW is, and has been, the key index for the US stock market. Yes, it has become more of an international index, but as the world’s largest consumer/innovator so has the US. For the past six years or so the SPX/DOW have remained in sync, wave for wave. So this fact is easy to forget. My point is this: When analyzing the US market the DOW should be reviewed first. Let’s look at the last nine years, starting in Oct 2002.

From Oct02 to early ’05 the DOW rallied in what could have been counted as five waves. The market was even threatening to break down as the weekly MACD hit neutral. After a small correction the DOW rallied to a new high around Mar05 and then broke to a lower low. Notice the MACD again went to neutral threatening to fall into bear market territory. The key level to watch was what we had marked as Major wave 4, around 9,700. The market had to make a decision: bull or bear, an inflection point. It chose bull.

Flash ahead to today. From Mar09 to present we can again count a potential five waves up in the DOW: Apr10, Jly10, Feb11, Mar11 and Apr11. After a minor correction we are now uptrending again. Notice where the MACD is this time. No threat of a breakdown.
If we count five waves up, the recent correction and current uptrend would be part of the next bear market. If we use the count posted, we’re looking for a significant uptrend to clear the bull market highs and allow enough room for a correction without an overlap. Notice the big difference in price between the Mar11 low and the Jun11 low. This can not be counted as a flat. These are separate waves. Also, it would be quite unusual to count it as a part of a triangle since the rally above Major 1 was quite high. This leaves us with two counts. The original one posted and the alternate count.

Should the DOW break down below the Mar11 low (11,555) the alternate count comes into play. Until then the market suggests it’s going higher.

CHARTS: http://stockcharts.com/...

http://caldaroew.spaces.live.com

After about 40 years of investing in the markets one learns that the markets are constantly changing, not only in price, but in what drives the markets. In the 1960s, the Nifty Fifty were the leaders of the stock market. In the 1970s, stock selection using Technical Analysis was important, as the market stayed with a trading range for the entire decade. In the 1980s, the market finally broke out of it doldrums, as the DOW broke through 1100 in 1982, and launched the greatest bull market on record. 

Sharing is an important aspect of a life. Over 100 people have joined our group, from all walks of life, covering twenty three countries across the globe. It's been the most fun I have ever had in the market. Sharing uncommon knowledge, with investors. In hope of aiding them in finding their financial independence.

Copyright © 2011 Tony Caldaro - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

David J. Harris
14 Jul 11, 22:47
Stock Market Inflection Point - Response

Tony,

I follow your articles closely and thank you for your published analysis, which has helped me in my understanding of wave analysis.

There appears to be a resistance level for the DOW at about 12,570 which has been tested several times over the past few days. If the market breaks this resistance level then it will indeed go higher, however, if not we will see a down trend. The models that I have in place are showing the market now in a short-term down trend into July and August and perhaps September. A Head and Shoulder pattern seems to be forming, and we are now coming of the right-hand side shoulder in a down trend.

I am anticipating a low that is in the range of 10,800 to 11,600 on the DOW, and therefore a low that will break through the 2011 March low. This would be the bottom of Wave 4 that has been forming since late April (and part of a 5 wave move that has been running up since the March low in 2009).

I am anticipating that this new low in the summer (and all the fear that goes with it) will be all that Ben Bernanke needs to get support for QE3 which will be required to push the DOW up to the range 14,000 to 14,700 in Q4 of 2012 just before the next presidential election. Bernanke has already stated (most recently this week) that he will add further stimulus if needed, and my estimate is that QE3 will begin Q4 2011 or Q1 2012, and run up to November 2012. A stimulus program that will last about 9 to 12 months.

The DOW is following a similar kind of pattern to the mid 1970's. Nevertheless, this does not bode well for the period 2013 to 2016. Whoever is president during this 4 year period to 2016 is going to have a heck of a job on their hands once the DOW starts to drop after the new high has been made. If Obama gets in for a second term then this will be a bonus since he will be more likely to make really hard decisions that are more characteristic of a second term, than a new incoming president, and it is going to be hard decisions that are needed.

Cheers,

David J. Harris


Post Comment

Only logged in users are allowed to post comments. Register/ Log in