Elliott Wave Analysis of the Dow Jones Industrial Average DJIA by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.
I’m seeing a possible 4th wave triangle in several US equity correlated items (like the AUD/USD currency pair, for instance), with the terminal upward thrust out of the triangle either complete, or nearly so. Also, the sizeable rally from October 4 in equities appears to be running out of steam, as indicated by the nearly formed 120 minute MACD divergence. And although my short term wave count for the Euro posted earlier today invalidated by 3 pips, the pair bounced off the 1.3940 resistance area yet again (1.3937 is the extreme of wave 4 of one lesser degree), so things are looking a bit “toppy” here, in my opinion. I wouldn’t count out the possibility of a small up-gap to a new high at tomorrow’s NY open, but if that does occur, it could be an exhaustion gap, which would be confirmed if quickly followed by aggressive selling.
One last note: According to SentimenTrader.com, short term bullish sentiment turned to the extreme today, which generally portends a short-term top. Intermediate sentiment isn’t quite bullish enough yet to expect a major turn, though. This supports my main wave count, which expects equities (short term) to move back toward the lower half of the Aug-Oct range starting quite soon, followed by a year-end seasonal rally, which is likely to mark the end of this bear-market correction. I continue to expect the year-end rally to be followed by a terrible 2012 in the markets.