Line in the Sand for the next 470-pts of Downside in the Dow
To say that the markets have been rather erratic on a day-to-day basis of late would be an understatement. However, despite the rotting long-term fundamentals surrounding the slow-motion implosion of intractable debt around the world, compared to the rollercoaster ride last summer, the current season has been a walk-in-the-park with an upside bias to boot.
Given the bipolar price action, one would assume it virtually impossible to draw lines in the sand, which impart specific point values and price targets effectual in capturing such erratic moves.
Behold the 30-minute price chart of the Dow rendered from the archives of our Near Term Outlook publication. Amid the chaos following the recent print low of 12492.33 in mid-July, we cited two upside price targets worth a combined 799 Dow points at 13066 and 13116 respectively.
On July 30, the Dow set a pivot high of 13128.48, capturing our two bullish upside price targets handily.
Then, on Wednesday August 1, we set another line in the sand. This one cited 260-pts of downside upon its breach with a target of 12800.
As illustrated, within 24-hours, the Dow plunged marginally in excess of said 260-pts, and tagged the downside price target of 12800 upon setting its pivot low at 12780.42 prior to Friday's rocket launch north of 13133.
All told, in the past two weeks, we have identified and captured over 1000 Dow points amid a market that has no apparent clue as to where it belongs.
So, where do we go from here?
Well, according to our chart, 13462 appears reasonable for an upside target however, a 470-pt bearish line in the sand may have something to say with regard to such near term prospects.
As we head into Monday, the 12839 level defines boundary to this bearish line in the sand, and by Wednesday, the line narrows its breach point by 100-pts at 12939.
To follow such illustrations regularly, one needs only to support such effectual efforts with a modest subscription to the Near Term Outlook.
Let the games continue, and let the most prepared and disciplined take home the most gold.
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Author: Joseph Russo
Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology
Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.
Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.
Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...
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In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).
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In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."
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On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."
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On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.
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Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.
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On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.
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For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.
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He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.
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