Insights 
VT 
The Dow Jones Industrial Average (DJI) is approaching the culmination of a long-term wave ((iii)) according to the Elliott Wave analysis. A critical price level is identified at $45,781, which serves as a support trend line indicating the end of wave (iv). As long as this support holds, the index is expected to continue reaching new all-time highs.
The current Elliott Wave analysis shows the DJI moving within a wave three of a larger five-wave trend. Wave ((iii)) began from a low on April 21, 2025, and has maintained an upward trajectory supported by a long-standing trend line. With wave (iv) concluding at the $45,781 level on October 16, the current focus is on wave (v) of ((iii)). The present rally suggests that wave iii of (v) of ((iii)) is in progress, indicating potential for further gains and new highs.
Completion Of Bullish Wave
In summary, the DJI is closing in on the completion of a bullish wave ((iii)). Should prices fall below $45,781, it may signal that wave ((iii)) has peaked, potentially leading to a 5-10% drop during wave ((iv)).
Based on the current Elliott Wave structure, we see the Dow Jones Industrial Average in the final stages of a strong upward move. The immediate catalyst is the anticipated end of the US government shutdown, which is fueling this push to new all-time highs. For the near term, this suggests maintaining a bullish stance by using short-dated call options to capitalize on this remaining upward momentum.
The low market volatility supports this view, with the VIX currently trading near yearly lows around 13, making option premiums relatively inexpensive. This environment is ideal for traders looking to capture the last leg of this rally, as long as the key support level of 45,781 holds. Recent economic data showing October’s core inflation holding at 2.1% and steady job growth further suggest the Federal Reserve will remain on hold, removing a potential obstacle for stocks in the immediate future.
Planning For Market Correction
However, we must prepare for the end of this wave, which implies a coming correction of 5-10%. This pattern is reminiscent of the market action in early 2018, when a sustained rally was followed by a quick 10% pullback before the larger uptrend continued. Therefore, traders should begin planning to purchase put options or establish bearish spreads as the index shows signs of peaking, using a decisive break below 45,781 as the primary trigger to shift from a bullish to a defensive posture.
