[DJIA] update

Model from the backlink is below.  While I remain bearish on the markets, the model obviously warned that the bounce could exceed bounce expectations because the bear market has not been established yet in EW terms: the most senior index has not seen 5 down yet.  Note:"senior" refers to the cherry picking and re-picking done to try to keep the DJIA (AKA the illusion) moving up.

 

The bears are now duking it out with the buy the dip crowd.  This is a war of attrition right now but the bears will win it because the economic data keeps getting worse and worse and the bulls are carrying a heavy debt burden.  The US will not decouple from the world.  We're all in this debt Ponzi together now.

In any case, the strength of the bounce opens the possibility that this is not the 4th wave of 1 but rather wave 2.  Other options are possible but the odds suggest by a good margin that the DJIA will soon experience a reversal to a lower low than the August low.  But if this turns out to be a 2 instead of a 4 keep in mind the caution about 2nd waves which occur at the start of major trend change: they can be deep vees.  The odds of this happening go up if the chart can break above the next red horizontal above current levels. 

Eventually however, this will likely resolve to the downside.  Too many other pieces are falling into place for another outcome.  Please see my next post on the BKX index for an example of what I'm referring to.