Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
War and Young Americans - 27th May 19
Stock Market Rally Over – Downtrend Resumes - 27th May 19
How to Choose a Good Online Estate Agent - 27th May 19
Bitcoin Price Stalls Near $8100 - 27th May 19
UK EU Election Results, Brexit Party Victory, Labour and Tory Bloodbath, UKIP and ChangeUK Die - 27th May 19
The Three M's of Hyperinflation : Milosevic, Mugabe, And Maduro - 26th May 19
Global Multi-Market / Asset Charts Review - 26th May 19
An Oil Shock Could Be the Black Swan That Finally Drives Gold Higher - 26th May 19
Brexit Party Forces Theresa May to Resign, Boris Johnson Next Tory Prime Minister? - 26th May 19
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

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

© 2005-2019 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