Ewj: elliott wave

Dow/Transports divergence is telling me that the Oct. high is the top and that the stock indices will trade well beyond the August lows. The attached chart shows how the Dow and Transports traded side by side throughout the 90's until they began to diverge in late 1999 early 2000. At the time the Dow made its final high there was an extreme divergence between the two indices. My second post will contain a chart of the same two indices at the recent Oct. 07 high showing the same extreme divergence.
 

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Here is the second chart... notice how the Dow and Transports were side by side at the July 07 peak but the Transports diverged with the Dow at the Oct. 07 high. The divergence was extreme and history tells us that large declines occur when the two averages make an extreme divergence. The Russell 2000 is very close to taking out its August low, the Dow is very close to a "Dow Theory Sell Signal". The decline from the Oct. high has the look of a "C" wave... lower lows followed by progressivly smaller/weaker highs. Take a look at a chart of Fed Ex(FDX) it is as ugly/bearish as Citigroup and Countrywide.

I hope you find this useful!
 

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Are patterns Repeating ??

Will be an interesting last hour or so if they do...:D
We all know how sharp the Vth wave will have to be.... :eek: :)

Wave iv of lesser ED's tend to like the 50% to 61.8% retrace so 1430-1435 on the SPX will be interesting..:)
 

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Quote from TraderRob:

Here is the second chart... notice how the Dow and Transports were side by side at the July 07 peak but the Transports diverged with the Dow at the Oct. 07 high. The divergence was extreme and history tells us that large declines occur when the two averages make an extreme divergence.

I hope you find this useful!
More...

As someone that used to work for Victor Sperandeo ( a noted Dow Theorist ) in my much younger days, I wonder just how valid Dow Theory is in a world of $100 per barrel oil, let alone being able to use such a "correlation" for trading purposes.

If I was a trader and based my long position bias on the chart of one of the most narrowly defined indexes such as the Dow Transports, I would be missing moves left and right, including the very sharp move off the late August lows in the broader market.

Not my cup of tea.
 
Overlapping again.
Diagonal Triangle Type II? I count 5 waves, not 3-3-3-3-3 as in a descending triangle. May be I'm bias, Mup.

Good charts Rob, but we have to wait until the Industrial confirm the Transport.

Agree with Landis. According with Dow Theory: increase order -> increase manufacturing -> increase transportation -> increase profit -> increase stock price = Bull Market. Recently increase order -> increase manufacturing -> rising Industrial average -> increase transportation but increase oil price -> decrease profit -> falling Transport average.
 
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