Share This Page         

For Stocks, the Line in the Sand Has been Drawn

Here's what the Global Dow’s technical picture implies for the DJIA

by Bob Stokes
Updated: June 27, 2018

You may have heard pundits on financial television say something like, "I see support for the Dow at this price level," or "This stock should experience some resistance at that price level."

So, what do these analysts mean by support and resistance?

Well, according to Technical Analysis of Stock Trends, the classic book by Robert Edwards and John Magee, support means buying in sufficient volume to prevent any further downward movement in prices for an appreciable period. Resistance is just the opposite. It means selling in enough volume to satisfy all bids, thereby preventing prices from going any higher for a while.

On a chart, after a support line is meaningfully broken, prices tend to move more freely downward. The opposite applies when lines of resistance are broken.

When support and resistance have long held, or have been touched several times, the price moves after a breakthrough can be quite dramatic.

With that in mind, here's a chart and commentary from our June 22 U.S. Short Term Update (wave labels available to subscribers):


The Global Dow comprises 150 global blue-chip stocks, including all 30 components of the DJIA. Unlike the DJIA, which is a price-weighted index, the Global Dow is equal-weighted so that price moves in large stocks hold no disproportionate sway over the index. The Global Dow peaked on January 29, the day after the DJIA, and traced out [an Elliott wave pattern downward] to February 9, along with the U.S. blue-chip stock indexes.

But notice how each successive rally thereafter has topped at a lower high despite the hefty representation of U.S. blue chips...

Heavy is an understatement, because:

"...the U.S. accounts for more than 42% of the total index's valuation."

Needless to say, if the Global Dow's support shelf gives way, it could have profound implications for U.S. stocks, as well.

No One Can Keep Up with ALL of the Stock Market's "Fundamentals"

The daily information flow is vast -- too much for any one investor. Yet here's the good news:

Even if you could consume all market-related news -- you don't need to. Indeed, to base your investment decisions on "fundamentals" can be counter-productive


Contrary to popular belief, EWI's research reveals that the stock market's trend is NOT governed by earnings, economic data, politics, trade wars or any other news.

It's governed by the Elliott wave model.

Tap into what our Elliott wave experts are showing and saying to subscribers, so you can position your portfolio for the dramatic changes that our analysts see just ahead.

Read below to learn how to get started with our generous, risk-free offer...

Here's How Your Financial Forecast Service Team Works to Prepare YOU For New Opportunities

Read This, And Then Let Us Show You FFS in Action, 100% Risk-Free

Your Financial Forecast Service team includes three of the best-known market analysts in the world – Robert Prechter, Steven Hochberg and Pete Kendall. If you are familiar with Elliott wave analysis, you know exactly who they are.

No other analysts in the world, anywhere, undertake the depth of research that goes into the Financial Forecast Service. Throughout the month, Bob, Steve and Pete sift through mountains of data, often studying 100 years of data or more. Why? Because a chart of the big, long term waves is the only way to know precisely where in the pattern we are today – and therefore, precisely where we are most likely to go next.

Here's what you get with the Financial Forecast Service, 100% Risk-Free for 30 days

Every Month

At the end of each month, your team of analysts gets together and lets the sparks fly. The result? The Elliott Wave Financial Forecast. It's just one of three essential parts of your Financial Forecast Service. When you get a new issue, you can be sure it contains the most critical information you must know about the markets this month.

Three Days Per Week

In addition, at the end of the U.S. trading session every Monday, Wednesday and Friday, your team updates its monthly analysis with the Short Term Update. In STU, they prepare you for the most likely price moves in the next 3-5 trading days.

Latest Research

Finally, once every month, Robert Prechter sends you his very latest research about Elliott waves in the markets and society. For 30+ years, The Elliott Wave Theorist has delivered more groundbreaking market research than any other publication on the planet. One month Bob might prepare you for a multi-year move in a market; the next he will deliver a jaw-dropping study that challenges everything you thought you knew about investing. Whatever he writes, it will help you hone your grasp of the psychology behind the markets – and give you an enormous advantage over other investors.

Prepare for Risks and Opportunities That Will Surprise Most Investors

See our eye-opening forecasts for stocks, bonds, gold, USD and more.

Risk-Free, Start Your Subscription Now


for 1 month of unparalleled market insights