Thursday, April 3, 2014

One very possible Dow model says the peak occurs tomorrow, 4/4/14.

I like the following Dow model but I hope the 2009 bull market peak does not occur on 4/4/14 which is tomorrow.  Unfortunately, that's what the model suggests might happen.  Again, if you don't know the significance of that number then do some Googling around because I'm not going to say.

It took me quite a while to make heads or tails of this crazy chart action but below is a model that makes sense for reasons that most people will not know about which, to me, increases the odds that it will happen. 

First off, it relies on the fact that when the 3rd wave is the extended wave then wave 1 and wave 5 will be of equal length.  So the next question was, how to count wave 1.  A critical clue came to me in the form of the expanding triangle you see circled in red lower left.  According to Prechter, triangles are always penultimate waves.  Thus, either 4th waves or B waves.   So that must mean that black 5 and blue 1 are as shown. 

Then I simply created a blue bar that was as tall as wave 1 and cloned it and moved it to the start of the last big triangle you see (pointed to by red arrow).  The length was just long enough to form a 5th wave throwover of the expanding triangle that I had already assigned a wave count to in the upper right of the chart.  The cross confirmation /correlation of multiple rules and guidelines points to a good count.

Even if this is not the end of the entire bull run, it should be the end of a large 5th wave with the expectation of a 500 point drop to the prior 4th (38.2 fib) or 650 points down to the 50% fib or a pull back to 15844 for the 61.8 fib.  Any way you cut it, either Friday or Monday I think a significant reversal will begin.

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