Short Term Trading Member Forum

[techcharter]

The Dow Transports e-waves

Tim Wood posted his weekly Dow Theory comments on the Dow Industrials vs the Transports. He's thinks a larger bear market rally is in play.

http://www.safehaven.com/article-13007.htm

I can agree with a multimonth consolidation on hand, but not fully. Just a quick glance of the Transports from the truncated high in June '08 to the March '09 lows shows a 5 segment move. Wave 2 was the consolidation around the 5000 level. Wave 4 consolidation was around the 3500 level.

http://stockcharts.com/h-sc/ui?s=$TRAN&p=D&yr=1&mn=3&dy=0&id=p93633734677

I think the markets have been in a multimonth rally since November '08 when considering the finer wave structures. I'm much more comfortable with a flat correction. The wave off the November '08 lows is clearly a 3 wave correction. The Jan '09 highs to the March '09 lows looks much more like a zigzag than a motive 5 -segment wave. Wave c should follow. So far it been motive with one consolidation. Target above 3500, and challenging the 200 DMA.

For Tim Wood's out come to be validated, the transport index would have to start a selloff pretty soon (wave b), ending below 2600, in choppy trading. This would create a 3 wave sequence off the March '09 lows. wave c zigzagwould then rally into late spring, finishing a double zigzag.

For my outcome to be validated, the market climbs higher to complete Wave c flat 3, 4, and 5. This would coincide nicely with my count and the addage, "Sell in May and go away"

Intraday-hour ticks

http://charts.barchart.com/chart.asp?sym=$dowt&data=Z60&date=051406&den=HIGH&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk