Using Ellioit Waves on DJIA

I have not been blogging on stock market for a while, partially because I made use of the long weekend to go to KL, visiting my parents. I don't get to see them much mainly because I settled myself in Singapore since 1980s.

While in KL, I managed some time to catch up with my reading, especially after I have bought 3 books from Amazon and THEY CAME EARLY! Two books on Elliots wave while one on Fibonacci. the Fibonacci one was rather disappointing but I got quite a catch on the Elliots.

After reading the books, the first conclusion I have was "boy! was I wrong about how to do wave count". First of all, it is not that difficult in theory. It is the interpretation that makes it complex. One must follow the basic principle of the wave count closely to get a proper count.


Fig 1 DJIA Weekly Chart

I have counted the DJIA base on my earlier understanding and after reading the book, I am making attempt to recount.

After reaching its top,I believe DJIA has done an abc correction, with a and c having 5 waves while b 3 waves. This I believe completed A. Base on its tapering pattern, I beleive this is wave B, which is supposed to be another abc waves. The a and b should have completed and it is now doing a "c" with a 5 waves up. However, I am lacking a 5th wave which seems to have just started. If this is so, DJIA might still have some way to go before dropping into a C wave.

While RSI and Stochastic went up, both indicators are showing mild divergence of coming down. Further to that its daily chart (not attached) has seen 14 days RSI on divergence while 5 days RSI reached higher. Seems like there is a lack of congruence in the indicators at this point of time.

My bet is still "Down".

The next resistance of the Dow is ar 10,827 while support at 10,455.