Domed House Update – Jan 14, 2015

Hi everyone,
As I mentioned here, I think the Dow is in a Three Peaks and Domed House pattern that began in early 2014. The “five reversals” phase (Points 15-20) is probably complete after the drop this week, implying a rally to substantial new highs (probably over Dow 19000) in the coming months.

dow tpdh with possible 5 reversals

If, on the other hand, the “five reversals” phase is not complete, the Dow could drop to the mid-16000s before casting too much doubt on the pattern’s validity in and of itself. However, given the bearish behavior of the NASDAQ-100 and its potential Elliott Wave patterns described in the previous post, a drop of more than 2% or so from current levels on the major indices with accelerating downside would suggest a correction much bigger than a drop within a Domed House.

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