Personal DJIA_Weekly Review and Forecast_5_27_2012

So after a bit more upwards movement in the Dow Jones this past Thursday and the subsequent downward movement on Friday, nearly breaking the critical level of wave-ii-blue, I think that wave [4] black has completed and that we are now in the midsts of what I will chart as wave [5], and sub-wave  i-green. As two of the five waves within a motive sequence tend towards similarity in amplitude, I am fleshing out  my previous prediction of [v]-black at $12,088  with  $12,064. 

$12,064 is $505 from the peak of wave [4] and the amplitude of wave [1]. It is sufficiently similar to my original prediction of $12,088. I will use the 24 point difference between these two numbers as the high probability region in terms of the price level upon the completion of wave [5]. While the strong negative tendency in the market makes it feasible for wave [5] to dip down to 50 points below this estimate, the price range outlined above is my officially forecast endpoint. I will draw a more accurate channel for this wave as i and ii-green complete this coming week. 

-W

Update to DJIA Prediction on 5_17_2012

The current wave form has placed the bottom of the [3] wave at $12,336. I believe that the upwards movement which followed in the past few days began with a 5-wave structure comprising of wave [a] of [4]. The following downturn in [b] back to the start of wave [a] and will I believe yield a truncated [c] wave, again signaling a very strong underlying negative force in the markets. I am estimating the likelihood that the correction will bounce off of the upper channel to be about 55%, though this is conservative. I think it is respectively unlikely that wave [c] will retrace wave [a] to 1.618% and have thus marked it with a rough 10% likelihood. The last option which is likely in my opinion is that the [c] wave meets with the top of wave [a] before falling. I placed that likelihood roughly around 40%.

Thus, given the strong negative motion in the market thus far, I think it is more likely that wave [c] will bounce from the upper trend channel and push the DJIA down to 12,088 in completion of  [5](1), before the entire [ wave ] retraces. I do not think that the (single degree larger) upward correction will reach .618 percent of the length of (1). Again, this presumption is based upon the strong overall negative force inherent within the market / economy at this time.

All the best,

-W

Personal_DJIA_Update_5_17_12

                I am very excited that my last prediction with regard to the high point before a bear market correction in the DJIA came within 9 points of the actual turning point on May 1st of this month!!! I predicted a height of $13,329 on March 26th, 2012 and the $DJIA touched at $13,338.66 before the current drop. The scope of the prediction is charted below below.

I have attached new charts giving the general breakdown of my updated predictions for the Dow Jones. In brief, the fact that the market has broken beneath the low of April 9th (~12,716), seems to indicated that the sideways movement we have seen was in fact a "flat correction" which broke down into a subwave-structure of [3-3-5]. The first [3] ended on April 9th, the second [3] ended on April 30th, and we are, as of the moment I am typing this, within an extension of the third sub-wave of the downward [5] in the previously mentioned [3-3-5] corrective pattern.

This downward movement should stop and correct somewhere between $12,357 and $12,379, at which point I believe the negative movement will retrace back upwards by 50% in a three wave structure, which will correspond to wave 2 of 5 (this present [5] of the [3-3-5] being wave 1 of the larger degree). My estimation for the price level at the completion of wave 2 is ~$12,848.

[It is possible that this negative [3-3-5] correction could just be a wave four and that the market would rise again by about 1000 points.] However, I am fairly comfortable dismissing this eventuality and labeling the fifth bull market wave as a fifth, instead of tying it in as a third wave extension, since it would hamper the "right look" of the wave structure. This prediction will be confirmed by either 1. an unfolding three wave corrective pattern after a fifth wave is completed in the current drop, or 2. a drop which exceeds $12,259.

[Assuming my predicted pattern to be the correct count] Corrective wave two should complete right around early June. June 1st-8th is my best estimate at the moment. At that point, intermediate wave 3 will bring the market down very quickly, and with a weak correction in intermediate wave 4, intermediate wave 5 should follow carry the market through to ~9300.

This process will occur fairly quickly. If the market has not experience significant downwards movement, namely breaking the next key price level at $11,760, it will certainly do so following the days of early June, which is the next time period that corresponds by 2.618 times the duration of minor wave -  a - which completed on October 3, 2011. This is significant because bull markets generally run 1.618 times longer than bear markets. (people are optimistic for a longer period of time than they are pessimistic). What that means is that the stores of social optimism should be thoroughly exasperated by that time and any negative movement which was being held back would certainly manifest itself as greater social pessimism unfolds.

Minor and Minute wave count and prediction (everything past  early June is a rougher estimate but the basic structure should be accurate).

Because we are now moving into a bear market C-wave, it should be noted that social mood often takes a violent turn at or near the completion of a bear market C-wave. Many of this and the past century's major conflicts erupt at the bottom of these types of waves. It will be interesting to watch international affairs, as well as domestic social behavior as this wave unfolds, though a certain wariness should undoubtedly coincide with the observation.

Minor and intermediate waves.

Moreover, I think we are beginning to round out the right shoulder of a head and shoulders pattern as displayed below. The first shoulder hit its peak in 1999-2000 and dipped into the collar in 200-2001, with the terrorist attack on September 11th prompting the very bottom of the c-wave correction. Then a large 3-wave corrective movement occurred, largely based on all of the various "bubbles" which burst in 2008-09. Since the bottom of 2009, the market has been forming its right shoulder. We are currently rounding out that form and will begin to slide down the right, likely correcting back to the lows of 2009.

Regards,

Warren