The DOW: Long-Term Elliott Wave Analysis Brief

By: Joseph Russo | Fri, Mar 7, 2014
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It's hard to believe that the rally in stocks from the 2009 bear market low is now 5-years in the making. Given that the last downturn lasted just 2-years, and that numerous equity markets have recently printed fresh historic highs, the argument that the ongoing bull market run is nothing but a bear market rally, is a rather weak one.

However, considering the pressing challenges within the real economy (X-Wall Street), the rather fragile geopolitical climate, and the slew of intractable budgetary troubles around the globe, it is rather surprising that we have witnessed this type of persistent and aggressive bull market continuing to evolve amid such quantified uncertainties. Clearly, there is a grand disconnect at play.

Dollar 2-14-14 Flirtation with Fiat Cliff

By now, we suspect it is obvious to most, that state sponsored central banks have been aggressively propping up (rigging) all financial markets by whatever means necessary. In case you had not noticed, free market capitalism has been absent for several decades now. What we have instead, is a growing police state of global fascism. Ultimately, in due course, the ongoing desperate measures of such corrupt forces will result in another catastrophic failure far worse than the last. Until that final-tick passes across the tape, there is no limit to the contrived market extremes occurring on many exchanges.

The following is our current read of the Elliott Wave tealeaves for the Dow Industrials. Before we endeavor to briefly articulate the wave count for the Dow, let us first define four upside price targets that have established themselves via simple chart pattern breakouts.

As noted on chart at the green up-arrows, the 18721 and 19725 targets shall remain defended so long as the market trades above the falling green trendlines from which each of these targets has spawned. In addition, we have derived noted targets of 17796 and 18151 via Fibonacci price extensions calculated from key pivots within this long-term monthly chart.

Technically, having no choice other than to ignore the fascist rigging of what should have otherwise been a complete collapse in the financial system circa 2008-2009; we are observing the 6469.95 bottom as an A-wave of Cycle dimension. The five-year miracle that follows, is tracing out a larger three-wave advance as defined by the primary degree red labels of A, B, and an eventual wave C, which remains in progress. Plausible turn months of interest on the chart above come to fore in March 2015, and August 2016.

The opposing tan trendlines represent a large expanding wedge pattern of which the Dow is presently breaking above in bullish form. The lower falling boundary to this expanding wedge registers south of Dow 6000 in the years 2015 and beyond.

Monthly Turns 3-6-14

In closing, the chart above takes a closer look at some prospective turn months remaining for the current calendar year. The present month of March 2014 marks the first of three nearby turn-months followed by August and October of 2014. Also noted on this chart is an additional upside price target of 16600.

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Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the 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, ...

  • 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).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • 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."

  • 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.

  • 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.

  • 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.

  • 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.

  • 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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