In Saturday's weekend update I emphasized the importance of the Dow breaking below the trend channel coming up from the August lows at the 23,000 price level. In light of today's large rally, nothing has changed except the level at which that trend channel will be broken. As the chart below indicates, the new level is at 23,200. The new trend-signal break is at 23,000. Between the two we can still look at 23,000 as a very significant line of support from late August, likely of the entire move up from January, 2017 (see weekend charts), and possibly even a lot farther.
Supporting my analysis are these words from Robert Prechter which which he sent out to his subscribers in a special Interim Bulletin on Monday:
"Sometimes prices will slightly exceed an upper channel line in a burst of excitement before reversing. Elliott called that event a throw-over. If the rise has further to go, it should not be by much...The Dow and S&P seem to have reached an ideal spot to register that top."
I've always had a hard time with Elliott Wave theoreticians' vis a vis equivocation. There is always some "alternative" count that goes the other way. Saying, "the market will go up, or if not it will go down," does not make for a very useful trading analysis. When someone of Prechter's stature is this unequivocal, it is time to pay attention. Albeit, "not very by much" does leave a little wiggle room, there are too many points of analysis coming together at this time and at these price levels to let go of the notion that something big is, or is about happen: A reversal of monumental proportions.
Meanwhile, we remain Long in our Dow trading model because we trade the trend, as we define it, and nothing else. When that changes, so will our models, and so will we.
TRADING MODELS
