For the Bullish scenario to work onthe Dow, the laggard, Banking/Financial sector has to shine again. These days there is nothing in their stars to indicate otherwise.
Financials is as bleak as the Euro Sovereign debt crisis and the structural US debt problem. Afterall, Standard and poors has downgraded US debt a notch. Nevertheless, compared to some others its still as good as gold actually.
Going to go out on a limb here to call a bottom in the Financials. Financials has peaked in Feburary and has since decline and not turned back since. Whereas, the broader market has, $DIA, Dow Jones, Peaked 3 months later in May, double topped in July.
Financials' peak Feburary 2011, correspond to only the 3rd wave peak of the broader market. So, Financials peaked earlier and has been beating a different path from the broader market. However, having said that, any revival in the the banking stocks will push the broader markethigher just as it has been weighed down by the financials.
Financials has completed or completing a corrective wave within a corrective wave. Taking a corrective wave as X-Y-Z of a larger degree from A-B-C, Financials has completed the "Y" wave which coincides with Wave 4 of the broader market.
So, as Financials pushed upwards to fininshed the last "bull" leg of the Corrective Wave, Wave Z, the broader market will pushed higher in the final Wave 5.
Like everything else in trading and charting, this scenario I hold true, till is proven otherwise. Even as I write, Dow has opened in the Asia market in the red, gapped down at that. Its down about 100pts. No surprise there actually. ......we just have to watch where it goes from there.......
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