Markets make major headlines after 5 years

The average percentage declines for the Dow Jones index is around 6-8% and yet last week alone we observed a fall of 6.61%. Yes, we should brace ourselves as the rollercoaster ride has only just begun.

The Fed is just as nervous as investors and they should be at this stage because they are now looking at “Damage Control” and the warning signs had been in place much before they anticipated.

There was much also concern as the Dow fell below its 200 day Moving Average as this is where the longer term Investment and Portfolio Managers pay attention to as a major valuation level.

Our downside target had been 12735 and the index sliced through this level and rallied back above this level late afternoon on Thursday. This is suggesting that we have most likely formed a wave 3 of 5 low at 12455.

My view is that we are now likely to see a consolidation phase to complete wave 4 around Fibonacci levels of 13222 – 13430.

From this point I expect another decline to take the index lower.

As long as we stay above 12455 and below 13338 then a lower high should be completed either around August 28^th or September 3^rd.

We should expect to see a significant low form around October 2^nd – 5^th and November 9^th.

Our downside Major price objective is now 11415 as long as 13695 is not breached. The index remains bearish below this key level for the intermediate term.