Friday, June 22, 2012

Elliott Wave Forecast for the Dow

On Target

This is a follow up to last weeks forecast, which provides a greater level of detail in explaining the efficacy of the tools that we use to forecast price and economic conditions.

As reality intrudes intermittently against the backdrop of failed political and economic systems around the world, price action throughout the financial sphere reflects such despite the gift of general calm provided by the extraordinary interventions of the failed statist authorities - who still maintain the absolute totalitarian monopoly to do so effectually. How much longer they can keep confidence elevated amid unequivocal failure is the trillion-dollar question. It could be a matter of weeks, months, or even years.

Under every circumstance, there exists no better means by which to anticipate the rapidly changing state of global economic conditions than to accurately interpret price charts, which telegraph predictable human reactions to the price mechanism at work in real time.

As we render the following forecast based on such, we will explain the charts mark-ups, which will walk you through how we have hit recent targets and arrive at our present conclusions.

6-20 Forecast - Dow

We left off last week correctly anticipating further upside toward the 12876-resistance level. We reminded our NTO and ECB subscribers of a potential turn date slated in advance for arrival on Wednesday June 20 (+/- 1 session).

As if right on cue, the Dow registered a print high of 12898.86 on Tuesday June 19, which was just 23-pts above our resistance level and did so in the session preceding our effective turn-date.

The 30-minute chart above illustrates the Dow plausibly completing five waves of progressive advance to the 12898 crest, then reversing downward toward the blue uptrend stopping initially ahead of the Fed at 12745.45. During and after the Fed-meeting, note how the Dow then thrashed violently higher, lower, then higher once again.

In today’s chart shown below, we observe the second erratic fed-induced high as wave 2 – or –b-.

It is critical to note that on Wednesday, before the big plunge on Thursday, we provided subscribers with a rising red trendline trajectory citing a 163-pt. sell-trigger boundary if breached.

6-22 Forecast - Dow

By the time the cash market opened up on Thursday, the Dow had breached our 163-pt. sell-trigger, which then translated to a downside price target at 12592.

Prior to Thursdays close, the Dow set a print low at 12561.46, which was around 30-points beyond our price target, easily capturing our predicted level of downside.

Heading into Monday, the 12561-pivot low is holding following Friday’s 67-pt. reaction rally.

Friday, June 22, 2012 post close:

  • We draw your attention to the 163-pts of downside captured amid trade beneath the 12592 target.
  • The bullish 13066 target is suspended, and its revival contingent upon reclaiming and sustaining trade above the rising green trendline trajectory (now dashed).
  • The move down from the 12898 crest appears corrective thus far inferring that more data is required to anticipate the markets future intent.
  • A common 38% retracement level for a 4th wave rally begins at 12690. Any rally north of 12745.45 prior to a setting a new low for the move down shall render this decline as corrective.
  • Sustained trade and closes above 12770 will raise odds for a retest or besting of the standing chart high at 12898.86.