Dow Jones Forecast…the possibilities looking forward…Dow Jones 100 year chart. There’s lots of information in the chart below but the arrows are possible or probable targets looking forward to the next half century. I know it’s impossible to forecast that far ahead, but’s fun. The first thing to look at is the expanding triangle, more often than not a triangle is a continuation pattern, so looking at the long term scenarios, there’s a good chance the market should continue, however, not yet. In order for this triangle to to complete itself we would need to see one more wave down to the 5000 area around 2018 or so. Remember, in Elliott Wave analysis, triangles are only waves 4 in an impulse wave or wave B in a corrective wave. Also there are times when triangles can be ending patterns or (megaphone) pattern, if that’s the case, the wave where in right now is would be the final wave and the price would end up in the previous wave 4 pattern. Looking in the chart below, that’s the 1970′s.
My personal opinion on this looking at all the other charts and taking into account what the central banks decision this week was…my Dow Jones Forecast is up… to mid 2013 to the 16000 then down to the 5000 level to complete the expanding triangle. If you look at last weeks post http://www.swingtradingforecast.com/shanghai-composite-index-buy-signal/ you’ll see what I mean when you look at the descending wedge pattern for the Shanghai Composite Index.
One thing I’ve learned about the markets is that anything can happen. Example…Ben Bernanke’s unlimited money printing, I guess it shouldn’t come as a complete shock, but this is almost scary. I thought about the markets all weekend and looked at charts to no end.
Ever since Thursday, September 13 I’ve been thinking about the Fed’s decision for unlimited purchasing of Mortgage Backed Securities. This whole thing is strange, this really is unprecedented. For one thing, in a true capitalist society, the bond market dictates bond prices and yield, the central banks lag the market. Ben Bernanke saying to the bond traders that he is going to purchase US treasury till the unemployment rate decreases, it would be suicide for the bond traders to short US bonds, or would it be?
I wonder if the financial markets last week, worldwide, were in the same kind of shape as September 2008 when the world fell apart. Some people are saying it’s the election coming up in November. All I know, this is pretty scary stuff. With Bernanke saying that the Central Bank is going to print money without a deadline is scary, something big must be happening behind closed doors. Perhaps it’s the fact that bond holders were going to demand higher yield for the amount of risk in US bonds, the chart above does indicate that. If interest rates were to rise, that would defiantly be a negative thing for the American balance sheet.
One other thing that comes to mind is the derivative market, that market isn’t shrinking. Maybe that’s ready to bust at the seams.
In summery, My Dow Jones Forecast for pivot point timing is still the same.
Pivot points for the financial markets are still the same…September 26-28 and November 9th, 2012.
Taking into account the similarities between the 1987 Dow Jones collapse and 2012. There is a one month lag between the the 2 years. This year we are peaking in September, whereas in 1987, the Dow Jones peaked in August. So we could have the election one week and a good old fashioned collapse the next.
As far as the gold stocks go they went up fast and I think they will peak with the rest of the stocks on September 28th as well. I’am not going to trust this market. Bernanke and Draghi are acting too weird for me at these levels. I like to buy low and sell high, I don’t have the temperament of buying on breakouts in this kind of market, I like picking off the pivot points. So one of these days, maybe even tomorrow, not sure yet, defiantly before the end of the month. I’am going to cash, sitting back, and watching the show.
The Chart above shows the possibilities of the Dow Jones Industrial Average looking forward. I’am looking at a target of 5000 in 2018 or so to complete the expanding triangle. I know it sounds crazy… but when you look at the chart above we could see the Dow Jones Industrial Average at 100,000 between 2025 and 2040.
Dow Jones Forecast, weekly chart, September 14, 2012, expanding triangel, megaphone pattern
The chart above is a weekly chart of my Dow Jones Forecast for 2013. It looks like Ben Bernanke is postponing the inevitable for one more year or so, or at least to July 2013.
HUI Index monthly chart September 14, 2012, Target 700, 2013
The HUI Index chart above is my target for the Gold Bugs Index. Everything is aligning for next summer.
Dow Jones Forecast, Daily Chart, similar to the 1987 collapse
Dow Jones Industrial Average, 1987 collapse
The 2 charts above show an Erie similarity between the Dow Jones Industrial Average 1987 collapse and the last 3 years leading up to September 14, 2012. The pivot points are almost identical for both charts. There are several differences:
- Volume – The volume wasn’t contracting the same way as the market was going up.
- Pivot points – The pivot points for 2012 are lagging by about a month compared to the 1987 collapse.
- Price appreciation – From 1 year prior to the collapse in 1987 the Dow Jones Industrial Average increased 58%. For the same period in 2011 and 2012 the Dow Jones Industrial average increased by 30%
Notice how the price went above the resistance line in 1987 only to fall below the resistance line to collapse.
1 year US Treasury Yield, September 14, 2012, The End of Low interest rates
