Elliott Wave Predictions

Elliott Wave Analysis of the Dow Jones Industrial Average DJIA e-mini (YM futures contract) by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.

Unfortunately, there are a number of Elliott Wave counts for the most recent movement in the US stock markets, so, on this chart, I’m showing the ones I think most likely. Since May 1, this looks very much like a leading diagonal, complete with a throw-over to end it. If it is a diagonal, it could be wave 1 of a new bear market, or wave A to start an ABC zigzag for Primary (burgundy) wave 4. Alternatively, it could be a double or triple zigzag correction, consisting of waves WXY, and possibly X & Z for a Primary Wave 4 (burgundy). In all cases, I’m looking for some sort of rally in at least 3 waves starting right away. In contracting diagonals, wave 3 should be shorter than wave 1 (which it is), and wave 5 should be shorter than wave 3. On my platform, wave 3 measures 390 ticks, and wave 5 has already reached 389 ticks. So if this is a diagonal, wave 5 has reached its maximum length, so invalidation of the diagonal would occur with movement below 12,227 in the YM contract, which corresponds to 12309.93 in the index. If that occurs, the top remaining count will be the “WXY(XZ) for wave 4 burgandy” concept.

Note added May 25 after the NY open: I’ve looked and looked again at these waves, and they count best as overlapping “threes”, and are not impulsive in character, so I don’t think a 1-2-1-2 impulsive bearish count is accurate. However, the most recent leg down in the Euro may be a “three”, which would count best as an X wave of a “WXY for wave 2 pink” correction for the Euro, which would give further weight to the top being “in” for the Euro back at 1.49398. This would, in turn, lend additional credibility to counting the stock market movement since May 1 as a leading diagonal to start the new bear market, with the bull market top already in at 12,875 (on the Dow index).  I’ll need to see whether the Euro actually makes a slight new below 1.39687 before it moves above 1.41384 in order to draw additional conclusions regarding the US Dollar and Stock Market.

Sid
ElliottWavePredictions.com