They’ve come to the conclusion that after years of the market not dropping it starts to become obvious. If it’s starting to become obvious, we could be close to what the Elliotticians call the point of recognition, which is about halfway through the move. That doesn’t mean we can’t get a real shake out where the nuts and coconuts fall out. Shorter shakeouts could happen at any time. Given where we are in the SPX and the FTSE we could be really close to one of those. We’ll be judging this market really careful once it gets a little higher at resistance, which should happen this week.
The Dow is also sitting in a potential wedge formation that wouldn’t have much further to go. It probably has another 600 points to go before it hits serious Fibonacci resistance. That would mean we can still see a new all-time high right in this sequence. None of this surprises us here at Lucas Wave. This is the kind of pattern that can get there in three days or three months. Three months is more likely. What the Dow is telling us is we could see an important high sooner as opposed to later. January has worked out better than I thought it would. If this wedge is real, then it could be telling us we could be in for a rough ride in the new legislative season in Washington.