Can the DOW make a New Local High or the 90% Level ??

One thing about Elliott Wave analysis is that it helps teach one how to be flexible in viewpoints and look at different markets in different ways at different times. Some people will find this maddening. Others might liken it to solving a crossword puzzle, waiting for certain clues to fall into place. Now some people absolutely hate to do crosswords; they don't want to waste their time - especially when it comes to just trying to figure out someone else's obscure references. I've often suggested they should pay you to do crosswords - as an incentive to get especially younger people to broaden their view points. Well, sometimes, the market does offer such compensation, if the clues can be figured out.

So, we have suggested that Monday might be a day that sees price inflows. But we don't know if that will be the case. And, even if it is, what stocks will the buying be centered in? Will it be Boeing or Apple? No one can know except the people doing any such buying. Will they sell the Russell again to buy the Dow in a somewhat defensive move against any potential down turn? With that question in mind, I had a fresh look at the Dow chart this weekend, and it appears below.

DJIA Cash Index - Daily - Potential Triangle

In a previous post, (see this LINK) we noted how the Dow might be making an expanding diagonal downwards. But, that count seems to have a degree violation in it - that the third wave's sub-waves are too long compared to the first. 

And so that leads to the conclusion of the logical opposite - that the venerable Dow might be making a very sideways triangle instead of a downward diagonal. All we can say at this point in time is that the DOW has, indeed, make a validly formed triangle. It has not made the downward diagonal, although such a potential diagonal has not formally invalidated, yet, either. And that means there could be an attempt to pop up out of the triangle.

We certainly have seen market periods where the indexes diverge from each other for days, nay, weeks at a time. This might be one of them.

Readers concerned about degree violations might note that in this count, wave ((b)) would now be longer in time than wave ((a)), meaning that the degree of the waves definitely turned. This is shown by the Fibonacci ruler, below where you can see where this potential triangle pattern is now more than 100% x ((a)).

Then, too, there appear to be no degree violations in the triangle as each of the triangle's green minuet waves ( ) is smaller in price and time than the minute degree  (( )) wave.

So, in this index, as in all others, we must be flexible and patient. It is possible for the Dow to pop up out of the triangle. Readers of yesterday's post know we are expecting at least one more wave series up in the S&P500 (based on the ES E-mini S&P500 futures). What does this mean for the Dow? Perhaps the above chart helps explain it. Only time will tell.

Have a very good rest of the weekend.

TraderJoe