Monday, July 27, 2009

Clear Pattern In The Utility Average



The Dow Utility Average gets little press, but the elliott wave pattern is pretty clear, at least down to the March low. The decline from the Jan 08 high occurred in a very clear 5 waves and the swing highs and lows were coincident with the broader market turning points. In general, we would expect that the countertrend rally would retrace 50% to 62% of the prior decline. This turns out to be very close to the zone of the 4th wave of lesser degree, the 4th wave in intermediate wave 3 down, which is often the area that retracements terminate. The DJ15 Utility Average may be a good coincident indicator for the broader averages.

4 comments:

dave said...

Craig,

I've forgotten 99.9% of what i ever knew about the DJUA in relation to the rest of the mkt.

How do you relate this very clear wave count to the rest of the broad mkt ?

Regards,
dave

dave said...

http://news.yahoo.com/s/ap/20090728/ap_on_re_us/us_nc_terror_arrests

??

R. Craig Pritchard said...

I don't have alot of evidence for a correlation other than simple observation that 1) the pattern is clear, 2) the turning points coincided with the SP turning points, and 3) most markets have been moving together for some time as explained by Robert Prechter.

I just think the impulse pattern is the clearest that we have in the US markets, so it offers us another chance to look for the end of the rally.

dave said...

"I just think the impulse pattern is the clearest that we have in the US markets..."

Good point. I often choose probability over possibilty & would rather follow the most responsible dog than the most erratic.

Regards,
dave