Courtesy of Doug Short.
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The rally off the July 10 low is unfolding in 5 waves similar to the 5 wave rally that unfolded off the June 25 low (see 50-min chart). The behavioral models on the 50-min chart say this 5th wave will finish on Thursday or Friday between 17,144-17,188.
The daily chart shows an active 46-day cycle from the Dec 31 high. The next 46-day cycle is Friday July 18. From an Elliott Wave perspective, the Dow Jones set a Wave 4 low in October 2013. If the July high is the 5th wave of some larger degree of Wave 3, then a larger degree Wave 4 should retest the Oct 2013 lesser degree Wave 4 low, and bottom around there.
A retest of the October low at 14,719 constitutes a 14% correction from peak to anticipated trough over the next 1-3 months. Most of the correction should be priced in 4-6 weeks from the peak date. Most likely 4 wks…. While you may be vacationing this summer, keep an eye on the markets, as things sure appear ripe for heating up.
John Bougearel is a Chartered Market Technician CMT and founder of Structural Logic Inc., a registered Commodity Trading Advisor offering managed accounts for clients. Structural Logic Research publishes a daily financial newsletter for institutional and retail clients. John is a featured financial market educator for the ICE Exchange, Market Technicians Association, and various FCMs and IBs. John has authored two books, The Changing Role of Gold and Riding the Storm Out: What Do Investors Do Now. John is also a featured financial analyst on Bloomberg’s roundtable, Fox News, and other financial news networks. John received his B.A. from St. Olaf College in 1985.
© John Bougearel
