Friday, January 31, 2014

New master DJIA model adds detail to current model

The DJIA dead cat bounce began only minutes after I suggested that a near term bottom was coming

Elliott waves are quite amazing IMO.

Now that I see what is happening and have had time to look at the individual waves in detail, I want to modify the model a bit.  My new master model is below.  In short, we just finished the top level 3rd wave.  The 2nd wave was meandering and so by the rule of alternation I have to model a vee recovery into wave 4 which likely exists at a point parallel to the 1-2 line.  So we rally up into Friday's close and then have an even stronger C wave rally on Monday according to my model.

After that, a 5th wave down which could end center channel or, in the really bearish case which I more expect, a trip to the 1-3 line.  This kind of volatility is very trade-able.


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