Followers of the Dow see a potential Triangle formation in their analysis. They suggest that there will be one more decline, possibly to new lows, in a Wave [E] before the Dow rallies to new highs in 2017.

It is a credible claim, based on Elliott Wave guidelines. However, the triangle form does not appear in any other major indexes.

For that reason, we may wish to monitor this decline. If it follows the guidelines for an impulsive decline, we may dismiss the Triangle formation as an accident of timing.

If we are to follow the DJIA in Yen, for example, we do see a formation more like the SPX showing a 5-Wave decline from the December peak. The DJIA in Euros shows a similar pattern. In order to lift the Dow considerably higher we would need to finish the impulsive Wave [C] decline first.

Wave (2) has rallied less than 50%, so Wave (3), which cannot be the smallest wave in an impulsive series, may have a target as low as 125.00. That would not fit the profile of a Triangle.

Regards,

Tony

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Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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