The Dow Jones Industrial has continue to edge higher despite the index is still trading below the pre-COVID level in February. With the expanded flat completed, the wave II of the Supercycle phase has been completed despite it took less than 2 years to complete.
While there is a risk of Dow Jones Industrial reverting back downwards by forming a double three corrective flats, the recent two weeks’ price action indicate that Dow managed to stay afloat above the immediate support at 27, 580.04. Although there is a weekly hanging man which may push prices lower, we need to observe if Dow is going to trade higher on Monday and will it break the 88.6% retracement level of B-C of the expanded flat.
Although the optimism of a strong impulse 3rd Supercycle wave is ongoing, the risk of a strong reversal at the top remains and as such, unless the resistance zone is broken, we are still trending the bullish trend cautiously with a strong double three corrective waves ahead. In another words, the Dow Jones Industrial may find its wave II of the Supercycle delayed.
Although the SMART money has indicate an outflow after hitting the peak, the rate of change remain positive as such, we are maintain the view that the market is relative on the bullish side.
Additionally, the Dow has confluence tightly the Smart money flow index and as such, there is a possible chance that the Dow will react strongly once the Smart money begin on the upside.
*The value on the y-axis is describing the % percentage rate of change.
*The Smart money index is a computation and aggregated of the total nominal gain and loss within the major U.S indices.
The Dow Jones industrial’s performance last week has been weaker than the previous week and the pennant formation has corrected into a bullish flag instead. With last Friday’s spectacular bullish return before closing and the golden cross in effect, we expect the index to return testing the 88.6% Fibonacci retracement level. Should it fails to clear past that level, Dow Jones may revert lower to 27,000 psychological support level.
Like the Dow Jones Industrial Average, the S&P 500 continue to lead the rally and it is trending tightly within a corrective range just like the Dow. The bullish sentiment is still on as the S&P 500 has continue to stay elevated above the resistance turned support zone after a bearish candle appeared last Wednesday at 161.8% extension level of the bullish pennant, which confluence with the resistance top.
While the S&P 500 has clear the high, the psychological high of 3,400 is still the barrier, breaking it will confirm the bullish biasness of the S&P 500 and reaching the target of 3,700 region which is the sub-wave (iii) target zone.
Nasdaq Composite continue to break new high on Friday and it has reached beyond 11,500 price level after our analysis based on our report dated 17th August. Moving forward, we may face some slight correction after Nasdaq reached 161.8% extension level of wave 4 and the extension level from 6,721.91-9,736.57. Should the level breaks upward, we will be seeing an extension of the 5th wave till 12,000.
Square Inc has made a stellar rise since March 2020, the intermediate impulse phase has come to an end after the divergence has confirmed the corrective action ahead. Based on the price structure, Square has completed (A) and (B) wave while the (C) is ongoing and based on the price action, the stock is likely to confirm the correction. First, the bearish pin bar has rejected the psychological resistance of US$160.00 and the subsequent closing below the 200.00% of the pennant signify a weaker bullish demand.
Additionally, the stock has displayed a potential double top and should prices breaks below US$130.00, we will find the C wave extend further downward to the support zone US$114.05-US$118.00.
On a larger note, the potential wave ((3)) of the cycle phase is far from over and zooming in, the current wave and price action are pointing to a higher price level. However, the prospect of the stock moving higher will temporary come to a halt as the bearish pin bar has rejected the 127.2% extension level of the bullish flag, which is also wave 4 of the intermediate phase.
Should US$275.00 be broken, then we will see a deeper correction downward to support zone 2 at US$255.22-US$244.14 before a rebound to complete wave 5.
Tesla had a good bullish run above US$2,000 and it nearly reach US$2,100. As strong Tesla may be right now, the graveyard doji at 161.8% extension level of wave IV indicate that the Bull Run is taking a temporary rest and is looking to correct downward to the resistance turned support zone at US$1,689.00 before turning up the heat to take on higher price level.
However, should Tesla rebound above US$1928.00 level or it gap up above 161.8% extension level, then we will see a high possible chance of an extended 5th wave of the primary phase which will see the stock rocketing beyond US$2,450.
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