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Well, the Dow in fact did stall at the upper channel line, and this morning,
8/8, continued the retest of the lower channel line at the 8080 range.
We seem to be holding so far, but no guarantees. Initial targets IF/AFTER a
break of the lower line are about 7990 (1.618 projection of the downthrust of
last Thursday and Friday, 7/31 & 8/1). 7990 also happens to be a 50%
retracement of the entire up move from 7/1. A further target down there is
7820, that's a 2.618 projection.
I think this is all very healthy, as long as we don't go past that 7820 mark.
The whole move since this initial impulse "up thrust", 7/1 to 7/3, is
corrective. As detailed in recent Elliott post, I think we need to end this
move before continuing the march upward. It is starting to look like the
move that started last Thursday 7/31, may be this "ending" move.
Will be interesting to see if we get enough "price and time" to constitute an
ending move. So far we have established two nice tops to draw a trendline
across, those being the Dow highs of 7/31 and 8/7. The slow recovery at the
beginning of this week did retrace an enormous amount of the distance lost on
that downmove on the Dow, so from an Elliott view I don't think that slow
recovery was a wave 2. Theoretically possible because there was not a 100%
retracement, but highly unlikely. A sideways triangle is probably more
likely, but this is just speculation. That new upper trendline is the key,
as will be the upper trendline of this "yet to form, suspected" triangle.
PJL
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