DIA

Discussion in 'ETFs' started by ccwells, Jan 27, 2010.

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  1. ccwells

    ccwells

    It appears that the major indexes have started the change in trend. DIA has fallen through the congestion area of November and December price action. It seems to be settling or even a bounce off the November highs. There will be an opportunity to enter a short sell in the next couple of days. We will have to be patient here and wait for the most opportune time.

    The price action has moved down in an impulsive fashion indicating that the main trend down is now resuming. The Elliott Wave pattern seems to be complete for the first wave down. Now we should see a multiple day corrective pattern that will retrace some of the recent decline. Whether the multiple days is two or four days is not known, however, I will watch the wave count closely to determine the best possible point of a complete corrective pattern.

    I can give you an idea of were the correction will end by using Fibonacci retracement levels and resistance levels. The price has already retraced the 23.6% level with the close of today. The most congested area in the recent decline is between the 38.2% and 50% levels. The 50% retracement level is also near the wave four high of 1/21/10. I must also tell you that the fifth wave is an extended wave and the 38.2% level is just above the fourth wave of the extended fifth wave.

    How much time will it take? Using Fibonacci Time Extension, we can see that the 38.2% time extension is 1/29/10 and the 61.8% is 2/1/09, next Tuesday.

    Where will the next leg down take the price? My first target is the 11/2/09 low. That also coincides with a major horizontal support line. It is possible to see the price drop to the 10/2/09 low. That level is near the potential 161.8% extension of wave 1, ultimately depending upon where wave 2 ends.