Market Report: Elliott Wave Analysis of The Dow Transports
The advance from the 2009 lows appears to be showing a 3 wave move, although that potentially could morph into a 5 wave move later on. The price action from the Oct 2011 lows is what I personally watching.
If you look closer it appears to be in 5 waves, so if the move is now in its final 5th wave we should be setting up for a pullback, based on that pullback will help us confirm if the idea in black, (if we were to see a strong break of 5500) or the idea in blue and setup for more upside.
Both ideas suggest we should be very close to a pullback, a closer look at wave 5 of  suggests a possible ending diagonal, (technicians call this a bearish wedge) that is an important clue as it suggests a weakening trend that is setting up to reverse.
The DIA idea I posted a few days back is potentially signally the same message, the SPX/SPY has the same message as well.
That message is that the US markets are likely setting up for a significant reversal and bulls need to be careful that they are not outstaying their welcome.
An interesting cycle hits this week as the length of the prior bull market cycle is exactly the same this coming week, so another caution for the bulls.
Stay tuned it should be a good ride.
Until next time,
Have a profitable week ahead.