A Glimpse at the DJIA

Recent posts have shown two competing a-b-c wave counts on the cash S&P500 index from the mid-August low. Both zigzag counts show the rally about to end without making a new all-time high. I still don't know which is correct but the Dow Jones Industrial Average (DJIA) is voting for one.

Today's chart is of the venerable Dow which also shows a nice a-b-c rally pattern from August. It is also showing a technical "sell" signal as of yesterday's close. While price closed higher last Friday the RSI (top indicator) failed to confirm. The Derivative Oscillator has now rolled over as well (bottom indicator).

In my view the retest of the July highs is failing.

Retest .... Done? or Ongoing?

The cash S&P500 index reached the minimum target pointed out in this journal last Friday morning. We certainly arrived there quickly! Was the low last Friday and subsequent move higher the expected successful retest of the low? I can't say for sure, can you?

I can tell you that we did not get a technical buy signal on the retest and so that facet of my work remains negative. Note also that we found resistance yesterday at the "red" moving average and the 50% retracement of the most recent decline.

My "gut" says we are going to visit the lows again over the next few days, get a technical "buy" signal and then rally upwards back towards 1500. All of this action, if it were to unfold this way, would be corrective (Elliott Wave Principle) in nature and part of wave "2 or b".

If it doesn't play out this way? No harm done ... I'm flexible. At the very least the weekly chart shows no reason to become a bull at this juncture. I continue to sit on the sidelines waiting for the next "clear" shorting opportunity.