DOW READY TO COLLAPSE!!!

Mukul Pal · June 15, 2009

WAVES.GLB.150609

After moving sideways for nine successive weeks, DOW is ready to trend. Or should we say collapse. Why?
First: Our targets of 8,800-9,000 remain continue to hold.
This is what we said on 28 May
“Though low probability above 8,500 prices could wriggle up to 9,000, but then as we said the move down should be fast. Only sub 8,200 do we move from UP BUT TOPPING to DOWN.”
Second: The corrective up formation looks more plausible than the clear impulsive strength. S&P has hit anticipated resistance levels (SLIDE 5)
28 May comments
“It is tough to label the current move up on DOW as impulsive, it is more corrective (W-X-Y) . Therefore even if the prices don’t fall immediately, the move up should be painful and choppy like it has been till now with more resistance coming in at higher levels.”
Third: Sideways action can be a sign of continuation pattern most of the time, but sometime sideways patterns could be termination patterns also. The expanding diagonal variation (SLIDE1) at this stage would mean DOW could be ready for the multi week reversal and could head first back to 8,650 and then potentially lower. DAX has already turned down and the Shanghai composite is also completing its CYCLE topping. Sub 8,720-8,700 DOW, we are DOWN on DOW and the rest of the global indices.
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