Last Chance for Long-Term Uptrend To Continue

Long Term Dow Revisted

See excellent-thoughts.blogspot.com for my previous long term view of the Dow.

The violation of the trendline drawn from the 1982 low to the 2003 low in the Dow failed a retest in late May. In most circles it is believed that this failure signalled the beginning of a severe downturn. See:

http://www.stockmarketcycles.com/current_observations.htm

for an example.

The extreme bearish sentiment observed at the July 2008 low in the Dow suggests that an important low has formed. I found that by drawing a trendline from the 1976 high to the 2000 high in the Dow and extending a parallel lower trendline from the 1982 low that it afforded exact support for the July 2008 low. This may formed the end of wave 4 from 2000 (see chart), although a triangle wave 4 could extend the correction as long as it does not violate the trendline.

If this scenario holds, then wave 5 would likely rise to ~36000 in the next 5-8 years. That would then be followed by a supercycle wave 4 which could be severe and retest Dow 7500.