Elliott Wave 5.0 "Reboot"

Tuesday, March 22, 2016

DJIA Daily Chart Wave Count Review:

I make a distinct difference between an investor and a trader, Investors only think long, but for traders it is irrelevant as long as they get to be on the right side of a trade. If it is going down and they are shorting or if they have long been anticipating for it to go up. 

From an Elliott Wave perspective buying on the dips is like trying to catch a falling knife which traders can rarely pull off, unless you have practiced it already. 

Look at the non mini DOW chart above and how many times there was a death defying drop ending with a spike which is the sharp end of the blade. Since September of 2015 we have had three of these major falling knife episodes where you swear we were in a Steven Seagal movie. Countless other smaller crashes were also there to terrorize us.   When a move heads north and a spike starts to develop then this is the opposite end of a falling knife, but you still get cut if you end up too early with too big of a position compared to your net cash size.  Betting with 5% of your money or betting with 50-80% of your money is a big difference in the fear level we generate ourselves. 

I believe that what many are calling a bear market is actually part of a bigger correction yet to finish, even though it looks like the DOW wants to keep going right now.   We are approaching my single top trend line which, if you look closely you will see twin H&S patterns being setup. The DJIA would have to blast right through this top trend line if there still is more power behind this move than what we think. 

 Overall, we could be looking at a "B" wave triangle in Minor degree and we would have to move down a "C" wave crash for a bottom in Intermediate degree. We need evidence that  this market is going to roll over, with some gusto behind it otherwise it will just be another boring correction. 

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