Best of the Week
Most Popular
1. Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - Nadeem_Walayat
2.Gold Price Focusing on May Cycle Bottom - Jim_Curry
3.Silver, silver, and silver! There’s More Than Silver, People! - P_Radomski_CFA
4.Is the Malaysian Economy a Potemkin Village - Sam_Chee_Kong
5.Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - Troy_Bombardia
6.A Big Stock Market Shock is About to Start - Martin C
7.A Long Term Gold Very Unpopular View - Rambus_Chartology
8.Stock Market “Sell in May and go away” Study When Stocks Are Down YTD - Troy_Bombardia
9.Global Currency RESET Challenge: Ultimate Twist - Jim_Willie_CB
10.The Coming Silver Supply Crunch Is Worse Than You Know - Jeff Clark
Last 7 days
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18
More on that Gold and Silver Ratio 'Deviant Conundrum' - 13th Jun 18
Silver Shares? Nobody Cares - 13th Jun 18
What Happens to Stocks, Forex, Commodities, and Bonds When the Fed Hikes Rates - 13th Jun 18
Gold and Silver Price Setting Up for A Sleeper Breakout - 13th Jun 18
Tesla Stock Analysis - 12th Jun 18
What Happens Next to Stocks when Russell Goes up 6 Weeks in a Row - 12th Jun 18
Gold vs. Stocks: Ratios Do Not Imply Correlation - 12th Jun 18
Silver’s Not-so-subtle Outperformance - 12th Jun 18
Why You Should Brace Yourself for Big Financial Changes - 11th Jun 18
Inflation to Skyrocket When Fed Reverts to New QE & Interest Rate Cuts - 11th Jun 18
Stock Market Topping Pattern or Just Consolidation? - 11th Jun 18
Study: What Happens Next to Stocks When the Put/Call Ratio is Very Low - 11th Jun 18
G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - 11th Jun 18
SPX Unshackled - 11th Jun 18
When Trump Met Fibonacci And Won - 11th Jun 18
FREE Theme Park Entry with Cadbury's Choc's! Legoland, Alton Towers, Chessington.... - 11th Jun 18
Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - 10th Jun 18
End of the World Stock Market Chart! - 10th Jun 18
All US Homes Are Overvalued - 10th Jun 18
Thorpe Theme Park London Car Park Exit Nightmare - Drivers Beware! - 10th Jun 18
Gold Price Summer Doldrums - 9th Jun 18
How to Prepare for Economic Uncertainty with Gold and Silver - 9th Jun 18
5 "Tells" that the Stock Markets Are About to Reverse - 9th Jun 18
Billionaire Schools Teacher in NAFTA Trade Talks - 9th Jun 18
Land Rover Discovery Sport ECO Mode Real World Driving MPG Fuel Economy - 9th Jun 18
Crude Oil Bullish Weekly Reversal vs. Bearish Monthly Reversal - 8th Jun 18
Fed’s Interest Rate Hike is Short term Bearish for Stocks - 8th Jun 18
The Deviant Conundrum Called Silver - 8th Jun 18
Pleasure Island Theme Park Cleethorpes, Last Day Trip Before it Closed Down - 8th Jun 18
America’s One-sided Domestic Financial War - 8th Jun 18
Debt Consolidation Advice: When and Why to Consolidate - 8th Jun 18
Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - 8th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Dow Jones Stock Market Index Forecast 2009 - Update1

Stock-Markets / Stocks Bear Market Feb 25, 2009 - 02:37 AM GMT

By: Nadeem_Walayat

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleThis analysis seeks to update the forecast of 20th January 2009 for the Dow Jones stocks index in the light of subsequent volatile price action.

The 2009 forecast is ( Dow Jones Forecast 2009 - 20th Jan 2009) - In Summary , I do not know at precisely what price level the Dow will make a low during 2009, my best estimate at this time is 6,600, but I am expecting that it will mark the start of a multi-year bull market that will eventually make 2008-2009's price action appear as a mere minor blip, much as the 1987 crash appears on today's price charts.


FORECAST DEVIATION - The DJIA closed last night at 7,350 which is significantly below the forecast trend that targets 6,600 by July 2009. This therefore supports the view that stock prices should be supported in the immediate future back towards the trend path. Therefore those looking for an immediate crash of the stock market may be disappointed, however any bounce at this point in time would not change the fundamental outlook that we remain in a VERY WEAK STOCKS BEAR MARKET that is increasingly targeting MUCH lower stock prices.

TREND ANALYSIS - Many stock market analysts that have been banking on a rally from January into April have been painfully proved wrong, as the bear market reasserted itself by busting through the November 7449 low on the DJIA. The markets attempts at rallying during late January and early February proved feeble, as correctly anticipated in the original forecast (20th Jan 09). This area of indecision now creates a resistance area for the stock market of between 8400 and 7,900 which is likely to contain any bounce so as to maintain the strongly bearish stock market trend.

PRICE TARGETS - The Dow has breached the 2003 low of 7197 which is bearish and confirms lower prices, longer range support exists at 6,400 and heavy support at 5700. Which implies that there is not much support on the way down to 6,400, a break of which would target a trend to below 6,000 for overshoot to 5,700. On the upside targets as illustrated above are contained by the consolidation area of 7900 to 8400 and therefore projects to a target price point of 7,900 to 8,100.

MACD - The MACD indicator has again turned lower, however it does support the original analysis of a significant low in the making by mid year, in that the February decline has not resulted in a significant breakdown on the MACD indicator which to me strongly suggests that the MACD is heading to make a higher low during mid 2009. I.e. a strongly bullish long-term signal.

SEASONAL TREND - The seasonal tendency is for the stock market to rally into late April / early May. This therefore could support a corrective rally from current levels for the stock indices, i.e. setting the market up for the final push lower into July.

ELLIOTT WAVE THEORY - My interpretation of Elliott wave theory implies that stock market has begun its 5th Major Wave lower of which the current impulse wave lower counts as wave 1, time wise this targets a decline for another 5 months which confirms the original forecast for a July 2009 low. However price wise EW targets much lower prices than the original target of 6,600 therefore there exists a strong probability of the Dow now busting below 6,600, slicing through 6000 enroute to the revised target of 5,700. which would represents a decline of about 23% on the last close. On a longer-term basis this interpretation also implies the bull market that starts in mid 2009 may now prove to be corrective, which will be come much clearer during the second half of 2009.

DJIA Forecast Update Conclusion

The above analysis confirms the bear market trend into mid July 2009. However it is increasingly unlikely that DJIA 6,600 will hold and therefore the bear market is targeting a trend towards a break of the lower target of 6,000. The anticipated trend is as illustrated in the below graph as after possible further immediate term selling is for the DJIA to target a rally to resistance of 7,900 and thereafter resumption of the bear trend to below 6000. However my longer term forecast of a multi-year bull run 'so far' still stands as after the bankrupt financial stocks have reached total wipeout, well there is not much further lower that the markets can be dragged following the July lows as evidenced by the Nasdaq's relative strength due to the fact it contains no financial stocks.

The FTSE is also expected to follow a similar trend with the original forecast as follows now targeting a trend towards the lower target of 3000 rather than the original forecast low of 3,400 as illustrated by the below graph.

Irving Fisher - Debt Deflation Theory

Increasingly analysts are jumping onto the Irving Fisher Economic theory bandwagon as for solutions to the unfolding severe recession and possible depression against the mainstream Keynesian solutions. As I tend to concentrate on the technical picture much more then economic theory I approach both camps from an unbiased point of view, however on digging into history I did uncover the following - Irving Fisher said on 5th September 1929 with the Dow Jones trading at 375, about 4% off its high - "There may be a recession in stock prices, but not anything in the nature of a crash." and again just days before the Great crash began - “Stock prices have reached what looks like a permanently high plateau.”

So analysts need to beware before they hitch their wagons to any economic theories, rather keep ones eyes firmly on the actual price action.

Other Financial Market Forecasts for 2009

These will be updated during the coming two weeks -

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Attention Editors and Publishers! - You have permission to republish THIS article. Republished articles must include attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Chris G
02 Mar 09, 10:22
Elliott Wave

Dear Friend,

I find your understanding of EW absolutely facinating.I need to tell you that....

I posted your article from financialsense.com

Dow Jones Stock market Index Forecast 2009 in our forum of trading room (~350 traders, of which ~15 top-profs).

The reaction was explosive!

Now your site is considered as goooood source for elliott wabe analysis!

Please take care of yourself and keep "counting the E-waves"... so as I can post your articles again

Ciao Amico,...& all the best from Aussieland


David Dzidzikashvili
06 Mar 09, 18:23
More bad economic news?

Dow Jones Industrial Average index is at its lowest levels because the investor condence level is at its bottom low. High unemployment and bad economic news also keep the stock market under pressure. I think unfreezing of the credit matkets should have a positive effect on investors, but I don't believe we will have that untill at least 2010. I think we might even see Dow in mid 5Ks or even lower if we don't have more good economic news soon.


Nadeem_Walayat
15 Mar 09, 23:09
Stocks Bottom
See the update of 15th March 2009 for significant update on the bear market bottom and subsuent trend for the Dow and FTSE. http://www.marketoracle.co.uk/Article9435.html

Post Comment

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

6 Critical Money Making Rules