Dow Jones – Weekly Analysis
Friday’s Dow Jones close was a nerve-breaker—it kept flipping a key technical signal back and forth between bulls and bears. Let’s break down the final outcome and compare it with the other major indices. The alignment—or divergence—between these signals may offer a clue about the next chain of events.
CANDLES
After Thursday’s move, the Dow came uncomfortably close to printing an 8/20 EMA bearish cross—first among the majors and a concern on its own. Friday was an epic seesaw between bulls and bears. In the end, bulls eked out a win by fewer than 10 points—statistical noise on a 46,000 index—but the message was still notable, reinforced by a daily Piercing Line and a weekly bullish Harami. Interestingly, the Dow also printed a three-candle weekly combo that closely resembles the prior pattern that launched a sizeable rally. I’m not sure I have this one cataloged—worth studying, documenting, and naming.
Despite a rally on Friday, the danger isn’t over. The 10D frame closes Monday, and to mitigate bearish odds the Dow needs at least a 0.35% lift—0.70% would be better.
So far, all trends remain bullish, with the monthly and larger frames firmly bullish.
ELLIOTT WAVES
Long Term
The Dow Jones continues to be positioned for the red path outlined in my long-term chart. In this setup, wave 5 of the larger impulse could extend for a year or longer, potentially driving the Dow toward the $50,000+ level.
Road Map
Last time, I discussed a potential shift from the red to the blue count. If the recent pullback doesn’t extend lower and the rally resumes, the technicals would favor the blue count—wave (iii) of 3 up next. A Christmas rally while stores are still full of Halloween stuff? An 8–10% unleveraged gift over the next two months? That would be something.
Inverse Head & Shoulders (IHS) & Flag
On June 24, I set the next major target for the Dow Jones at 49,600—projecting about a 15% gain from the 43,200 level. The index is already halfway there, and the target remains firmly intact.
SUMMARY:
The Dow Jones remains long-term bullish following September’s monthly and Q3 quarterly closes. The index was soft in the first half of October, but there are signs that the drawback is over. If the decline is indeed done and bullish reversal signals confirm next week, the index (and the market) may kick off a Christmas rally.
As noted in the June 1 Monthly Review: “The Dow Jones appears to be aligning with the red path shown on the long-term chart last updated in December 2024. If this scenario plays out, the index is currently in wave 5 of a larger impulse, which may continue for a year or longer and ultimately carry the Dow beyond 50,000.” That outlook remains intact—and I wouldn’t be surprised if the Dow reaches 50,000 this year.
Happy Trading!
