Tuesday, 28 May 2013

Dow Jones Industrial Average showing five waves down, perfectly positioned to turn lower now

US stock markets were closed Monday, but futures markets traded. In after hours trade the Dow is now perfectly positioned to turn lower, if (if) the up trend of recent months has ended. For charts that hint the up trend may indeed have ended, see yesterday's Dow post.

First chart shows an updated version of yesterday's hourly chart channel. I say the market is perfectly positioned to turn lower now because it is current testing the top of an upwards corrective trend channel formed from last week's low, which notably runs parallel to the larger up trend channel.

Second chart zooms in for clarity, and to highlight five waves down in the initial decline, which in the Elliott Wave model defines the trend as down, so long as the high of the 22nd is not beaten. Points at risk on a bearish stance against that level is low. Let's see.