By Joe Russo
At the five-year anniversary (a Fibonacci turn-year) from its historic print high in October of 2007, the Dow is threatening to mark another October cyclical peak.
From a fresh historic high in late September, the Apple bellwether is also threatening to mark a lasting high of substantial import.
As we continue to have great success in charting both of these markets, we have decided to share with readers grounds for considering plausible tops of significance in both.
In short, the case for a plausible cyclical top in the Dow rests upon the downward impulsive footprints left in the wake of recent declines. From the October 5 high at 13661.87, the Dow fell impulsively to the first pivot low noted at 13296.51 on the chart below.
A 78.6% retracement rally to the 13588.65 pivot high occurred swiftly thereafter, but quickly gave way to another five-wave impulsive decline to a fresh new low on Friday October 26, which also happens to be a suspected turn-date. We warn that this may be setting up a bearish nested series of 1st and 2nd waves.
As the Dow moved down toward its first pivot low at 13296.51, we drew a line in the sand for chart service subscribers, which called for a 375-pt decline toward the 13062 target. Amid the lows on Friday October 26, we captured this target.
What would turn the Dow bullish?
Though still struggling to find a short-term bottom, we would not be surprised to see a retracement rally ensue following Friday’s projected turn-date low. What would really turn the Dow back into the bullish camp is if it were to achieve sustained trade and closes above 13475.
In short, the case for a plausible cyclical top Apple is the same as the Dow, and rests upon the downward impulsive footprints left in the wake of recent declines. From the September 21 high at 705.07, Apple has fallen impulsively to the pivot low noted at 691 on the chart below.
With a forthcoming prospective turn-date slated for November 1, we may see lower lows into this period or an attempted rally back and subsequent failure. Of added note is the $581.50 level which if breached, shall negate
bullish prospects for the 4-wave down in question.
As Apple moved down beneath 644 support (now resistance), we kept Chart-Cast members long from a price of 399.90, positions which we established back in December of 2011. Yesterday however, we got an email alert confirmation to take in excess of 50% in profits and reverse short, which we did at today’s open of 609.43. If you are wondering about the negative month-to-date equity displayed in the lower chart panel, it is simply the mark-to-market amount of open profits drawn down from the start of the month.
What would turn Apple bullish?
Though still struggling to find a short-term bottom, we would not be surprised to see a retracement rally ensue following Friday’s low. What would really turn Apple back into the bullish camp is if it were to achieve sustained trade and closes above 662.
Consider yourselves warned with a proviso for the bullish contingencies so noted.
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