Dow 2009

Dow Jones Index Prediction

Assuming this is a Bear market rally; here's some math for your brain to digest: It assumes that 50% retracements are critical reversal points that control a lot of trending and counter trending moves:

All #'s based on Tradestation monthly data

Past Dow High = 14,198
Past Dow Low = 6,469

Projected End of Bear Market Rally = 10,286(market retraces the 50% Difference + the recent low = this projection)
...whaddya think?

The Mechanical Day Trader

edit: updated the correct retrace # after using the Fib calculator in TS...guess I "fibbed"...
 
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mechanicaldaytrader said:
Assuming this is a Bear market rally; here's some math for your brain to digest: It assumes that 50% retracements are critical reversal points that control a lot of trending and counter trending moves:

All #'s based on Tradestation monthly data

Past Dow High = 14,198
Past Dow Low = 6,469
Difference = 7,729
50% of Difference = 3,864

Projected End of Bear Market Rally = 11,593 (market retraces the 50% Difference + the recent low = this projection)
...whaddya think?

The Mechanical Day Trader
Click to expand...



11500 by when?
 
Atilla said:
11500 by when?
Click to expand...


gosh, I give ya the price, and you want the time too? :eek: haha

Assuming we have a month of consolidation (august), the next two historically "waterloo" months are October (late) and December/January. 5 months up so far, and the Dow has covered 2,600 points; another 2,000+ points in maybe 4 months? That puts it late October - early January for the market top, imo.

I'd expect violent reversals in August and October, to hit long stops in the market, then immediately go higher.

how'z that?

The Mechanical Day Trader
 
All #'s based on Tradestation monthly data

Past Dow High = 14,198
Past Dow Low = 6,469
38% of Retracement

Projected End of Bear Market Rally = 9,388(market retraces the 38% Difference + the recent low = this projection)
...whaddya think #2?

here's some market commentary on the major indexes, and discussion about a 50% or a 38% retracement... with accompanying graphs as well.

I'm liking the likelihood of a 38% retrace with a meltdown after Labor Day, when the U.S. traders come back from the Hamptons. I think August will be choppy, with a bearish week at the end of the month...

contrary view: given that US economic policy is highly inflationary, this will cause US indexes to keep going up, to account for the "inflation"...I think that will occur a year from now...before that time, the U.S. economy will continue to contract and 'deflate', thus indexes will be trending downward, until the Fed's inflationary actions kick in next year...successively poor U.S. Treasury auctions will also affect equities as well.

There will be a flight to quality to Chicom markets and assets & to oil based commodities in the coming 24 months also, imo.

The Mechanical Day Trader
 
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mechanicaldaytrader said:
gosh, I give ya the price, and you want the time too? :eek: haha

Assuming we have a month of consolidation (august), the next two historically "waterloo" months are October (late) and December/January. 5 months up so far, and the Dow has covered 2,600 points; another 2,000+ points in maybe 4 months? That puts it late October - early January for the market top, imo.

I'd expect violent reversals in August and October, to hit long stops in the market, then immediately go higher.

how'z that?

The Mechanical Day Trader
Click to expand...


Interesting MDT... Here is my take on the charts... 50% retrace I make out to be 10300.

I'm guessing we may end the year around 9400.

I'm also guessing middle of next week DOW will tank.

I haven't seen test of the lows so I believe this is a bear market rally and I'm still looking to test lows before feeling convinced of a decent recovery.

As for the fundamentals -I can not help but feel the US economy is in an irreversible decline and nothing the Fed has done so far has rectified but on the contrary accelerated that descent into oblivion. As I say it is more of a feeling.

I don't know of any country where you can pass a $800bn dollar expenditure / stimulus / support package (call it what you will) through Senate on 4 pages of A4 and not be accountable as to where that money is spent.

Nothing unusual it seems in all this as there is only more talk of yet another stimulus package to probably buy US treasury bonds which no one any longer wishes to buy.

As GW Bush has once said if you can fool em once, you sure darn right foolem again twice... :cheesy: Or something like that anyway... :confused:

I take your point about valuation of the indeces in consequence to changes in inflation but I that exercised has already been carried out against the value of gold and the DOW was pretty much on the tarmac...

We live in interesting times... (y)
 

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i think we will continue to rally this summer in light volume to atleast the 50% on S&P's. i think the fed will probably raise interest rates by .5. stocks will turn down for the next big bear move, usd will see new highs into 2010 for some bone crushing deflation
 
...rather mystified as to Gold...considering that the ChiComs were buying vast quantities and yet the price did not reflect that surge in demand...I think the Rothchilds have that market cornered as well...it seems that the Fed Reserve has leased out Gold to protect the Dollar from collapsing these past years...scuttlebut is that the US currency has NO or very LITTLE gold for currency backing.

The U.S. is a house of cards and a paper tiger regarding the currency... with Britain slightly ahead of the U.S. in plunging to oblivion and slave status within a decade....?

The Mechanical Day Trader
 
More Nope & Change

The Market Ticker

The FDIC is broke

The Market Ticker

The dirty little secret about the US Housing market and "green shoots" is that tons of foreclosed/non performing inventory is held off the market & thus the banks & mortgage companies do not write down tons of inventory & false bottoms appear in the U.S. housing market. When the dam breaks and this inventory DOES show up, the shorts shall rule the markets, while deflation writes down assets & portfolios....commodities/food should inflate to counteract world currency values, which will likely plummet since the assets they denominate are also plummeting in value.

Vicous spiral downward for equities, bonds, currencies, spiral upward for day to day necessities. Bartering will be common, since currencies will not have a realistic value to cope with day to day life (democratic republic Germany Pre-Hitler).

The Mechanical Day Trader
 
mechanicaldaytrader said:
More Nope & Change

The Market Ticker

The FDIC is broke

The Market Ticker

The dirty little secret about the US Housing market and "green shoots" is that tons of foreclosed/non performing inventory is held off the market & thus the banks & mortgage companies do not write down tons of inventory & false bottoms appear in the U.S. housing market. When the dam breaks and this inventory DOES show up, the shorts shall rule the markets, while deflation writes down assets & portfolios....commodities/food should inflate to counteract world currency values, which will likely plummet since the assets they denominate are also plummeting in value.

Vicous spiral downward for equities, bonds, currencies, spiral upward for day to day necessities. Bartering will be common, since currencies will not have a realistic value to cope with day to day life (democratic republic Germany Pre-Hitler).

The Mechanical Day Trader
Click to expand...


Very interesting links MDT. I concur with the analysis.

Debt is hidden in the system. There is no transparency. Markets require in theory and practice "perfect information". On one side we have instant info based on technology and on the other we have perfect deceit based on Government rules and regulations.

To add fuel to the fire, I'm not certain the earning power of the economies (US & EU) to be able to maintain their previous market places or profitability in the decades to come. That is the ability to pay back that debt is based on earnings in the past - which is not likely to be the same in the future but in fact less - is what I'm saying. Labelling it "challenging times" takes a lot of imagination.

Only way to reduce all this debt is via inflation and currency devaluations. Shift in economic power and purchasing power will have to take place.

Good post and links. (y)
 
i thought you said there is perfect infomation in the markets and they always tend towards equilibriam?

"Debt is hidden in the system. There is no transparency." that's your idea of perfect information in the market place? lol
 
It will be interesting to see how the stock market reacts now the liquidity is being slowly removed.
 
well I am not sure where the DOW is going so I am out for the moment, having had a manageable small loss on a short punt which I had placed too early. We've had a couple of down days and are resting on the 20 day EMA. Whether we break down through this for a concerted re-trace or bounce back up off it in a resurgence of bull fever I do not know, so shall watch and wait.

Anyone else have a view or live position?
 
moonwalker said:
well I am not sure where the DOW is going so I am out for the moment, having had a manageable small loss on a short punt which I had placed too early. We've had a couple of down days and are resting on the 20 day EMA. Whether we break down through this for a concerted re-trace or bounce back up off it in a resurgence of bull fever I do not know, so shall watch and wait.

Anyone else have a view or live position?
Click to expand...

The move down today was very similar to the move of 20/04. Everyone was expecting the bears to come up and we had a profit taking which sent the index down 3%.

Today looks much more oversold than back there. We have support at 9110 followed by 9000 and 8900. I have a small long at the first resistance, will add if we get 9000 and 8900.


Edit: The target for my current long is 9250.
 
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moonwalker said:
well I am not sure where the DOW is going so I am out for the moment, having had a manageable small loss on a short punt which I had placed too early. We've had a couple of down days and are resting on the 20 day EMA. Whether we break down through this for a concerted re-trace or bounce back up off it in a resurgence of bull fever I do not know, so shall watch and wait.

Anyone else have a view or live position?
Click to expand...

I'm a daytrader, so I don't care which way the market goes...BUT...I'd be short thru the rest of the year, particularly if there is any move towards Dow 10,000, probably where the Bears are waiting with renewed short interest. I expect a brief run up from there after this retracement pierces 9,000 (all #'s are Dow Cash). That brief rally will form the head of a head/shoulders....shorts will nested at R1 & R2 through January, imo.

Pay attention to AM Highs that remain untouched the rest of the day...that's where the shorts are....they typically have about a 100 point stop loss from that position and seek to make up to 500 points from each overnight position over the next 'x' days.

If the market can't make another run up to 10,000, then the current short interest will likely hold positions until October; then look for new short positions taken and held through January and beyond.

I've been watching this stuff over a dozen years, seems like a replay of previous runs...

The Mechanical Trader
 
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...just to clarify, when I spoke of the AM high being untouched, I was referring to the 'futures' AM High...recently that has been near 9280 and now today 9180...trading systems are short from 9280 for sure...(for how many days we don't know)

good post vinicius...food for thought...

The Mechanical Trader
 
Looks like the DOW may have trouble breaking through 9500 level. Is this even warranted? Seems like we're an important point where the market is rallying based on positive economic reports that have been coming out. But then you have PIMCO and Warren Buffett warning about the economy and foreclosures at their highlest levels in the US. Maybe the next bubble... :whistling
 
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