Elliottician and TA Thread

maximoney1 – volume spikes agree with the trend change, with short covering and new money coming in causing the wave 3 impulse to 10959. The other indices have gone through to 5 year highs and the narrow nature of the DOW30 is susceptible to the controlling influences of the short selling community. Exxon got hammered yesterday because oil prices dropped. XOM dropped 2.4% and PG. down 1.49%. The balancing rise/fall on the rest of the index components mean only a small drop overall.

Wether or not the DOW30 will hit 5 year high before year end I haven’t a clue, maybe someone with options experience can tell us the future following yesterdays expiry. I believe most US private investors use the calendar year end as their tax year end date (they can choose any period they like) and the capital gains tax rules may favour selling on the last or first day of your tax year depending on individual circumstances. I assume the Wall Street traders will want the maximum gain from their own portfolios, and there is no reason to sell short until all of them agree.

I post the DOW30 weekly chart which shows the wave 5 target at the all time high – if it gets there quickly or slowly (or ever) I think will depend on commodity prices and interest rates, with the ever present terrorist / rouge nation threat always waiting to strike.



The 4 and 5 wave as labelled may in fact be the first two waves of a much longer irregular wave 4 flat which could continue until 2008.
The lower trend line is drawn through the October lows and the upper trend line intersects with the all time high in the first week of May 2006