In retrospect, there’s something fascinating about the Dot-com bubble era and how the Dow Jones Industrial Average (DJIA) price peak at the turn of the century served as an internal third within an even larger-degree Wave I. We then witnessed a final internal fifth move higher from 2003-2007 that was abruptly cut down by a Financial Crisis, bringing the domestic and global economy to its knees.
It now appears that the 2008 pullback (Wave II bottom) and recovery effort since early 2009 (larger Wave III bullish rise) seem to fit into a predictable Elliott Wave pattern, giving us more visibility of what’s to come. With that said, we expect this bullish impulse wave to stretch out and sub-divide its way higher, exceeding the effort of the Wave I that topped out in 2007. More specifically, we’re looking for a Wave III move that is 1.618 or 2.618 times the price move of Wave I.
In the meantime, it’s important to remain focused on Wave III’s sub-divisions. Determining the “true” end of the internal first wave is easier said than done, but we’ve annotated what we believe to be a valid count at this point in time. After the current bullish move finalizes, we’ll likely find ourselves fending off another recession.
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