This is a long post, so please skip if you are not interested in chart explanation and cycles, thanks.
Reading through some posts on the XJO, I discovered some interesting posts which indicated that the DJI was projected to move in direct opposition to the XJO projected bottom around early May. For example, a previous cyclic analysis using Gann/Dunnigan's square root technique I posted showed a possible bottom around the 2nd May, whilst there were at least two posts in this forum showing the DJI was projected to top around that time.
I do think that no one is wrong, because at any one time there are multiple cycles in motion, and it is important to refer to which cycle - short or long term cycle and even then, are we referring to the same defined time periods or frequencies etc.
So for want of satisfying myself, I have proceeded to actually analyse the DJI to see whether there is the so-called "opposition" ( ie opposite direction )to that which I've previously posted in the XJO...and the following chart is the result:
Observations =================
1. The short term cycle of DJI indicates that we have actually moved out of the time window for a short term top and has started to move down cycle ( although price haven't followed ...yet)as shown on the short term cycle chart. There is additional credence to this because from bar counting, we observe a bar count "5" indicating a possible CIT on that date as well.
However, price has not yet followed, and the reason for this is because we are still on an upcycle on the longer term cycle of the DJI as shown on the chart. In other words, the effects of the short term downcycle is moderated by the effects of the longer term cycle which continues to be up. ( The DJI is vibrating to 102 days at present:))
2. Between the two cycles, it is seen that the longer term upcycle is more dominant, and has a cycle top projected on the 15th May 2011, and with the short term cycle projected to follow with a short term top a few days later. What is most important to note is that thereafter, both the long term cycle and the short term cycle will be moving in tandem with synergy in a down cycle..something that we should pay attention to:) ( this is shown as the time period after the purple vertical line on the chart)
3. The short term cycle low ( centre of time window) of the DJI is projected on the 8th May ( see the small blue bar at the cycle bottom on the XJO short term cycle chart ), while that of the XJO is projected on the 5th May ( refer my previous chart, centre of time window). This difference of a few days does NOT support the popular opinion that the cycles of the DJI is in direct opposition to the XJO... rather, it does support the idea that the XJO is running a little ahead of the DJI and in the same direction.
4. Is there any other technical evidence to support this finding further? To check further, I have plotted both the smart money index and the dumb money index together. For the newest tops, there is always a divergence between the smart money flow and the price. We can observe that the smart money starts to flow down( smart money selling) while the price index continues to move upwards for a while, before the price then resolves also in the direction of smart money as well...which is downwards. As at last Friday's close, we have NOT yet sighted this divergence between the smart money flow and the price index...suggesting that we have not yet achieve the peak or top as yet, since the divergence should be sighted before a peak or top.
These are some of my thoughts in verifying the projected cycles of DJI with the XJO. Once again, we are trying to catch a glimpse of the future which remains an imprecise science. This is charting and my charting can be horribly wrong, and so please consider this post for its pure entertainment value only, and relegate it to the status of idle chat and mumbo jumbo with no trading value whatsoever, if you so please.
For good precise technical projections, please refer to maxi48's short but exact posts on the XJO in this forum:)
(20min delay)