Dow Jones Industrial Average

Dow Jones Industrial Average

A first choice must naturally be a major stock index, and given the turmoil over the past two years I have taken a look at the Dow Jones Industrial Average (DJIA) to try to ascertain whether the decline from the 14,198.10 high was merely a correction or whether there are further losses to come.

I have chosen the daily chart (Figure 7.1) to highlight what I feel is the likelihood that the entire decline from the peak was a complete correction and not just a complex correction that could keep it trading in a range for some years. I have counted this as a Triple Three which therefore implies the next larger move will be a rally that will reach new highs. I did find that some ratios were not quite as precise as I have found in the forex markets, but the vast majority of projections and retracements were within a reasonable variance of the calculated levels (Table 7.1).

Figure 7.1 DJIA Decline from the 14,198.10 High in a Triple Three

The first ABC decline worked quite well, although the 141.4% projection in Wave (c) has never been a common ratio seen in Wave (c). However, the 58.6% retracement in Wave (x) is very common and came close to the actual final stalling point.

Table 7.2 lists the next two ABC declines.

The rest of the ratios were quite convincing to me that the index has seen a Triple Three, and thus overall we should be looking for a new high at some point.