2 replies to this topic

[Douglas]

In a bold affirmation of my steadfast belief that if you can't predict accurately, at least predict frequently, I note that my risk summation system results this week look similar to last week in that there are relatively high values every day with modest peaks on Tuesday and Wednesday March 4th & 5th and on Friday the 7th, so like last week, not a lot of help timing-wise.  

 

Last week instead of a decisive plunge down with fireworks that I thought might be at hand, the DJIA just fizzled, swinging back and forth forming an expanding triangle frustrating bulls and bears to the delight of short term traders.  Edwards & Magee in their tome on the Technical Analysis of Stock Trends said that expanding triangles occur in markets which lack intelligence or control.   Given events in the Oval Office, I think that intelligence and control were probably the least used descriptions of what transpired last week.   The peaks in risk that I identified on Monday the 24th and Thursday the 27th in last week's post just tagged a couple of humps in the triangle.  I suppose the next trend will be established by whichever side of the expanding triangle is broken and properly tested first. 

 

 

Speaking of triangles, the one that I noted in the DJIA futures in last week's post string pointing to a turn on Tuesday the 25th didn't amount to much only catching a minor low which was taken out in just a couple of days.  Like all indicators, sometimes triangle focuses catch a decent turn, and sometimes they don't though I still think they're worth noting.

 

Sentiment measures that I track have dipped to levels that have resulted in sharp rallies in the past as can be seen in the plot below of an average of the sentiment values that I track weekly, but notice that in 2022 a similar low sentiment value only led to a brief rally that failed resulting in lower stock prices, so bulls probably shouldn't get too cocky just yet. 

 

 

Both my bearish and bullish EWave counts are still in play, so no help there.  The flood of new money from auto-index-investing retirement plans hits the market in the new month early this week as do more company stock buy-backs, so the bulls should have the advantage.  

 

Regards,

Douglas

 

 

 

[Douglas]

The bottom of the expanding triangle in the DJIA shown above was broken today for a few minutes, but the test of the bottom of the lower trend line failed with the DJIA crossing back inside the expanding triangle, so no trend signal so far.  Maybe on tariff Tuesday tomorrow.  A bullish EWave way of looking at today would be to say that the top near the open this morning was the end of a wave 4 consolidation with the 5 waves down in the sell-off today forming wave 5 which becomes a bit more likely if today's bottom holds tomorrow.   

 

The bear case is that today should have been strong as I noted above due to beginning of the month automatic investment flows, so today's action showed serious weakness.

 

 

Regards,

Douglas

Edited by Douglas, 03 March 2025 - 04:56 PM.

[Douglas]

The low currently in place a few hours ago in the DJIA has some nice symmetry with the expanding triangle that I noted above.  Given the rip downward, it's hard to know if it will hold, but the equal movement target certainly does look nice.  

 

 

The plot below is an updated reprise of a chart that I posted a couple of weeks ago showing additional downside DJIA correction targets.   The purple large gap closure target has already been exceeded with a smaller gap target below marked by a blue line, but the 200 SMA which could provide support lies in the way with the green 38% retracement target below both of those the choice of which depends on just how pessimistic you are.

 

 

A trifecta of Andrew's pitchfork, the 200 SMA and multiple pivots shown below point to a DJIA target at about 41850, so lots of possible targets if the current low doesn't hold. 

 

 

Regards,

Douglas