Elliott Wave Analysis of the Dow Jones Transportation Average by Sid from ElliottWavePredictions.com. Click on the charts twice to enlarge.
The “reporters” at the most prominent financial TV news network have lately been chirping about Dow Theory, the oldest known form of technical analysis of the markets, proclaiming that new highs in both the Transports and the Industrials comfirm a bull market.
However, the Elliott Wave pattern in the Transports is corrective, and nearly complete in my opinion. Here’s what I’m seeing in the Transports:
– The monthly chart shows that the movement up from the March 2009 low is built in “threes”, and is overlapping. These are classic corrective structures.
– The weekly chart shows the corrective upward movement more clearly. with a weekly MACD histogram divergence likely to form with the next bearish (red) candle. On a semi-log chart, wave B burgundy is right at 1.382 times the length that wave A burgundy was. This is the most common relationship between wave B and wave A of an expanded or running flat.
– The daily chart reveals a blue wave B triangle having recently finished, and the strong upward movement over the past few days as a terminal thrust from the triangle. Based on Elliott’s triangle measuring technique, the thrust is likely to end around 6492, or about 1.2% higher than today’s close.