[img_assist|nid=12730|title=Point & Figure chart of Dow|desc=|link=node|align=left|width=500|height=260]
I’ve been playing with Point & Figure charts lately – they collapse volatility and make it easier to see the big picture
This chart looks a little funky because I’ve scrunched the bars together to get more data in – it goes back to ’98
If the rally has now ended, it failed to retrace 61.8% of the previous decline – that might or might not mean anything but the 61.8% level would have been a more ‘normal’ place for a healthy pullback to occur
Using a Fibonacci expansion of the decline and the subsequent rally we can project to the downside and find some possible targets assuming the Dow continues down from here – 38.2% gets us to 7788 (there’s support around 8100 as well) – 61.8% takes us to 5971 where we could bounce off the trendline going back to ’98 – this is the same trendline that caught the Dow at 6600 last year – 100% takes us to Dow 3000
