Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

FTSE100 and Dow Jones show signs of having Peaked following US Elections

Stock-Markets / Forecasts & Technical Analysis Nov 11, 2006 - 10:28 AM GMT

By: Nadeem_Walayat

Stock-Markets

The US Mid-term election has come gone, with the stock markets having on cue rallied into the election, now post election the stock markets are starting to waver and could be heading for significant sell off during the traditionally strongest period for stock market gains. Many novices and professionals alike have taken the recent rally to beyond 12,000 in the Dow Jones and to above 6,200 in FTSE 100, as a sign of a Bull Market breakout and a signal to buy.

FTSE100 and Dow Jones show signs of having Peaked post US Elections


FTSE100 and Dow Jones show signs of having Peaked post US Elections

Seasonally, late October through to April is the the best period for world stock markets as measured by the Dow Jones Industrial Averages and the FTSE100. Add to that the 4 year US election cycle, which further reinforces the bull trends case going forward. There is a problem with this scenerio, and that is that there was no decline from September through to October.

Why would an expected market decline from Sept to Oct not occur ? Why ? Because most people were expecting it to occur in line with the seasonal expectations, as occurred last year. Similarly the US election cycle has now been well publcised, but since following the pattern on cue for much of 2006, the Dow Jones diverged from the expected price pattern from late August 06 (As per the article of 22nd October 2006 US Presidential Cycle Mid-term Election and the Stock Market).

The economic situation in the USA continues to deteriorate, as the housing market continues to fall, and growth forecasts again being revised lower. This so far has not been reflected in lowered earnings expectations going forward, which implies that the US Stock Market will be in store for earnings shocks going forward. Similarly in the UK, which following the latest base rate rise in response to inflation will slow growth and companies earnings as further rate rises are likely during 2007.

On the technical side, the new high in the Dow Jones has not been confirmed as per Dow Theory ie. the Transports have not hit new highs, and many of the other stock indices are trading well below their previous highs, so there has been little technical confirmation for the breakout in the Dow Jones.

Thus far the breakouts to new highs have not had follow through, on the contrary the picture being painted is that of failure. This now strongly suggests that the opposite to the seasonal trend is likely to occur, instead of stock market gains, we can expect losses, resulting in an aggressive decline in both the Dow Jones and the FTSE100.

A 50% retracement of the move from the June Lows to recent highs would peg an initial target for the Dow Jones of 11,450 and a target for the FTSE of 5,850.

Nadeem Walayat

http://www.marketoracle.co.uk

Disclaimer - This Analysis / Forecast / Trade Scenerio is provided for general information purposes only and not a solicitation or recommendation to enter into any market position, and you are reminded to seek independent professional advice before entering into any investments or trading positions.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments


29 Nov 06, 01:29
Re: FTSE100 and Dow Jones show signs of having Peaked following US Elections
Can you please, please, PLEASE do an update on the FTSE 100

Is it still going to go to 5850 or what ?

And if so by when, or do you think it could bottom at above 6000 ?

Thanks :)

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules