A dip in the dow. Why now??

We all know that tabloid “news” stories are about as steady as Paris Hilton’s nerves upon entering prison. One day, you read that “So In Love” celebrity couple such and such is planning to expand its brood and purchase joint burial plots.

Then, TWO days later, another tabloid reports that said couple has long since bought a lovely time-share… in SPLITSVILLE.

Such is the nature of crowdability OVER credibility.

Problem is -- all to often, we see the same flagrant inconsistencies surface in the mainstream financial media, with no one the wiser.

Take, for example, the June 4 news story regarding the unbreakable union between the Dow Jones Industrial Average and its uptrend, one so strong as to “shrug off” an 8.3% plunge in China’s Shanghai Composite Index.

* “Wall Street takes the tumble in Chinese shares in stride, proving that the US stock market could withstand turbulence” in red-chip stocks -- observes a same-day Associated Press.
* “The economy is really in a sweet spot right now,” adds Bloomberg. “There are certainly enough positives to justify the market going higher… that are far more important that this China news.”

Forget the fact that NOTHING, NADA, ZILCH has changed in the way of the supposedly “positive” fundamental backdrop since the last serious Shanghai sell-off: on “Black” Tuesday, February 27, when Chinese shares plummeted 8.8% (a mere .5% more than the June 4 drop).

Yet at that time, the red-chip dip sent “shockwaves” throughout the financial world, hurling the Dow over 400 points DOWN and slashing $3.2 TRILLION dollars off the global marketplace’s value.

The idea that this time, US stocks would brush off “This China News” is far-fetched by any standard.

Then, when the Dow found itself 200-plus points BELOW its all-time high following a two-day losing streak that began on JUNE 5 -- the usual suspects had no choice but to look closer to home for a cause of the indexes break-up with Sweet Rally.

Enter salacious news story: The DJIA Found In The Arms Of A Mysterious Fed-Head.

In other words: “Rate woes sack stocks. Cautious remarks by the Federal Reserve chairman raised worries that the Central Bank could raise rates later this year. This move is clearly interest-rate driven.” (CNN Money June 6)

Pardon our French but… Shhhhaa! The US market has been “fearing a rise in rates” since the Fed took its hand off the trigger finger last August. Yet the Dow Jones has had no problem “shrugging off” such rumors on its way to a new, all-time high since.

It comes down to this: If you want the real story behind the ups and downs in the US Stock Market, walk away from the mainstream AND check out the June 4 Short Term Update.

In that publication, our analysts kept their eyes peeled to the only factors that can influence major changes in the Dow trend: market structure, Fibonacci Time relationships, daily sentiment, and critical trend lines.

From that information alone, STU suggested the “upside potential appears limited.”

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Elliott Wave International - Expert Financial Market Forecasting