Dhanvarsha: Educate Yourself ...

Please note .....is it good news ????
U.S. employment fell for a third straight month in August, but the drop was far less than expected and private hiring was a positive surprise, relieving concerns about a stalling economic recovery.
Source ..http://www.reuters.com/article/idINN0222785620100904?rpc=44
It is only the way to hold you on positive side ... that you are at better position and for that they utilize a very simple methodology... earlier announced fall will be 16 % jobs will be dropped by 100 k and later announced that ...oho better than expected ???what and where is better ...where are you heading ...market following rules of nature ...Elliot's/ Fib & Dow's researches and will trade accordingly ...
Just read what they found ...why they drawn their formulas....??

The Fibonacci sequence

The Fibonacci sequence of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms and sequence continues infinitely. One of the remarkable characteristics of this numerical sequence is that each number is approximately 1.618 times greater than the preceding number. This common relationship between every number in the series is the foundation of the common ratios used in retracement studies.
The key Fibonacci ratio of 61.8% - also referred to as "the golden ratio" or "the golden mean" - is found by dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153, and 55/89 = 0.6179.

The 38.2% ratio is found by dividing one number in the series by the number that is found two places to the right. For example: 55/144 = 0.3819.

The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right. For example: 8/34 = 0.2352.
For reasons that are unclear, these ratios seem to play an important role in the stock market, just as they do in nature, and can be used to determine critical points that cause an asset's price to reverse. The direction of the prior trend is likely to continue once the price of the asset has retraced to one of the ratios listed above. The following chart illustrates how Fibonacci retracement can be used. Notice how the price changes direction as it approaches the support/resistance levels.

Elliott Wave Theory

Elliott Wave Theory interprets market actions in terms of recurrent price structures obedient to the Fibonacci sequence. Basically, Market cycles are composed of two major types of Wave : Impulse Wave and Corrective Wave. For every impulse wave, it can be sub-divided into 5 - wave structure (1-2-3-4-5), while for corrective wave, it can be sub-divided into 3 - wave structures (a-b-c).

Surfer's Waves within Wave

An important feature of Elliott Wave is that they are fractal in nature. 'Fractal' means market structure are built from similar patterns on a larger or smaller scales. Therefore, we can count the wave on a long-term yearly market chart as well as short-term hourly market chart. See waves within wave:

Rules for Wave Count

Based on the market pattern, we can identify ' where we are' in term of wave count. Nevertheless, as the market pattern is relatively simplistic, there are several rules for valid counts:

Wave 2 should not break below the beginning of Wave 1;
Wave 3 should not be the shortest wave among Wave 1, 3 and 5;
Wave 4 should not overlap with Wave 1, except for wave 1, 5, a or c of a higher degree.
Rule of Alternation : Wave 2 and 4 should unfold in two different wave forms.

Wave forms in Impulse Wave

There are three major types of wave form in Impulse Wave:

(a) Extended Wave

Among Wave 1, 3 and 5, only one should unfolded into extended wave. 'Extension' means the wave is elongated in nature and sub-waves are conspicuous in relation to waves of higher degree. See extension pattern:

(b) Diagonal Triangle at Wave 5

Sometimes, the momentum at Wave 5 is so weak that the 2nd and 4th sub-waves overlap with each other and evolved into diagonal triangle.

(c) 5th Wave Failure

In some other circumstances, the Wave 5 is so weak than it even cannot surpass the top of the wave 3, causing a double top at the end of the trend. See diagonal triangle and failure fifth pattern:

Wave Forms in Corrective Wave

Corrective Wave forms are rather complicated, but basically we can categorize them into six major wave forms:

Zig-Zag : abc pattern composed of 5-3-5 sub-wave structure.
Flat : abc pattern composed of 3-3-5 sub-wave structure, with b equals a.
Irregular : abc pattern composed of 3-3-5 sub-wave structure, with b longer than a.
Horizontal Triangle : 5-wave triangular pattern composed of 3-3-3-3-3 sub-wave structure.
Double Three : abcxabc pattern composed of any two from above, linked by x wave.
Triple Three : abcxabcxabc pattern composed of any three from above, linked by two x waves.

See Six Corrective patterns:

Conclusion

The attractiveness of Elliott Wave Analysis is : Three impulse wave forms and six corrective wave forms are conclusive. All we have to do is to identify which wave form is going to unfold in order to predict future market actions. This is a bold statement, needless to say, knowledge of market historical wave patterns and experiences in wave count are of paramount importance.

Six Basic Tenets of Dow Theory

The market has three movements (1) The "main movement", primary movement or major trend may last from less than a year to several years. It can be bullish or bearish. (2) The "medium swing", secondary reaction or intermediate reaction may last from ten days to three months and generally retraces from 33% to 66% of the primary price change since the previous medium swing or start of the main movement. (3) The "short swing" or minor movement varies with opinion from hours to a month or more. The three movements may be simultaneous, for instance, a daily minor movement in a bearish secondary reaction in a bullish primary movement.
Market trends have three phases Dow Theory asserts that major market trends are composed of three phases: an accumulation phase, a public participation phase, and a distribution phase. The accumulation phase (phase 1) is a period when investors "in the know" are actively buying (selling) stock against the general opinion of the market. During this phase, the stock price does not change much because these investors are in the minority absorbing (releasing) stock that the market at large is supplying (demanding). Eventually, the market catches on to these astute investors and a rapid price change occurs (phase 2). This occurs when trend followers and other technically oriented investors participate. This phase continues until rampant speculation occurs. At this point, the astute investors begin to distribute their holdings to the market (phase 3).
The stock market discounts all news Stock prices quickly incorporate new information as soon as it becomes available. Once news is released, stock prices will change to reflect this new information. On this point, Dow Theory agrees with one of the premises of theefficient market hypothesis.
Stock market averages must confirm each other
In Dow's time, the US was a growing industrial power. The US had population centers but factories were scattered throughout the country. Factories had to ship their goods to market, usually by rail. Dow's first stock averages were an index of industrial (manufacturing) companies and rail companies. To Dow, a bull market in industrials could not occur unless the railway average rallied as well, usually first. According to this logic, if manufacturers' profits are rising, it follows that they are producing more. If they produce more, then they have to ship more goods to consumers. Hence, if an investor is looking for signs of health in manufacturers, he or she should look at the performance of the companies that ship the output of them to market, the railroads. The two averages should be moving in the same direction. When the performance of the averages diverge, it is a warning that change is in the air.Both Barron's Magazine and the Wall Street Journal still publish the daily performance of the Dow Jones Transportation Index in chart form. The index contains major railroads, shipping companies, and air freight carriers in the US.
Trends are confirmed by volume
Dow believed that volume confirmed price trends. When prices move on low volume, there could be many different explanations why. An overly aggressive seller could be present for example. But when price movements are accompanied by high volume, Dow believed this represented the "true" market view. If many participants are active in a particular security, and the price moves significantly in one direction, Dow maintained that this was the direction in which the market anticipated continued movement. To him, it was a signal that a trend is developing.
Trends exist until definitive signals prove that they have ended Dow believed that trends existed despite "market noise". Markets might temporarily move in the direction opposite to the trend, but they will soon resume the prior move. The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors.

Source ...http://en.wikipedia.org/wiki/Dow_Theory
Feel Free to ask me For Free E-books on wave principles , Fib ratios and Dow theory ... Please mail/message at kailash123p@yahoo.co.in
Yesterday Dow improved by 1 % due to ......

Dow Jones Industrial Average
(DJI: ^DJI)

Index Value: 10,447.93

Trade Time: 4:02PM EDT

Change: 127.83 (1.24%)

Prev Close: 10,320.10

Open: 10,321.92

Day's Range: 10,321.84 -10,451.15

52wk Range: 9,302.28 -11,309.00