Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Return of Stock Market Dow 36,000 Forecast

Stock-Markets / Stock Markets 2013 Mar 23, 2013 - 12:53 PM GMT

By: Clif_Droke

Stock-Markets

Some of you may remember the unforgettable title of the 1999 financial best-seller, Dow 36,000. It made a lot of waves back during the heyday of the internet stocks and day trading, but unfortunately for the authors, the timing of the book's release was less than ideal. The market topped out in late '99 and the infamous "tech wreck" followed in 2000. To this day, Dow 36,000 is considered as the ultimately example of a contrarian indicator - that is, when a book cover announces an extremely bullish forecast, the end is usually near for the bull.


I was surprised to discover recently that the Dow 36,000 forecast has been resurrected. A Bloomberg article last week penned by the co-author of the book, James Glassman, tried to make the case that his mis-timed forecast still has validity in the foreseeable future. Glassman argued that Dow 36,000 is within reach in view of current levels of market momentum, corporate earnings valuations, etc. Given that the first release of Dow 36, 000 was a contrarian harbinger of doom, should we be concerned by its reappearance in the media?

INDU Daily Chart

To answer that question I recently paid a visit to my local Barnes & Noble bookseller. I've derived a great deal of useful data over the years, from a contrarian perspective, from perusing the shelves of mainstream booksellers. When the financial section of book stores like B&N are brim-full with bearish titles, like they were for much of 2009-2012, you're generally safe in assuming that the market is probably not going to crash. This is based on the principle that when all the scary bearish scenarios make the covers of mainstream books, the negatives have already been fully discounted by the stock market. What's more, book authors are notorious for being behind the curve of market trends. Most of them write about what happened yesterday, not about what's going to happen tomorrow.

Bearish book titles have abounded in recent years and a few examples will suffice: The Warning: The Coming Great Crash in the Stock Market, Conquer the Crash, the The Great Crash Ahead, Patriots: Suriving the Coming Crash, the Coming Collapse of the Dollar and How to Profit From It . Admittedly the numbers of crash-related books have thinned from bookstore shelves in the last year or so, but I found many more bearish book titles on my latest visit than bullish titles. I didn't get the impression, as I did in the late '90s, that the collective mindset of financial book writers was overly optimistic - far from it! There's still a great deal of caution and conservative that characterizes today's leading financial book titles and Dow 36,000 is at this point an anomaly.

If ever Dow 36,000 and its ilk become the rule rather than the exception, we'll definitely have much to worry about as far as the stock market is concerned. For now, however, I think we can pretty much discount the super-bullish forecast of Dow 36,000 as being an attention-getting ploy rather than a manifestation of widespread bullish psychology.

Gold and the Cyprus Crisis

The latest scare out of Europe occurred during this week's EU Summit. European finance ministers agreed to extend a bailout for Portugal and Ireland. They also agreed on a 10 billion euros rescue plan for Cyprus, a reduction from the original 17 billion euros. The European Central Bank (ECB) had planned on forcing banks in Cyprus to impose a 9.9% levy on deposits compared to the previously announced 6.75% levy on bank deposits up to 100,000 euros. Cyprus politicians on Mar. 19 voted the levy down in defiance of the ECB, however. In response the ECB backed down and agreed to proceed with supplying liquidity to Cyprus banks without the tax.

Had it been implemented, the unprecedented levy could have triggered a widespread panic over similar levies being imposed on other peripheral European banks. This in turn would have raised additional concerns on the European debt crisis, resulting in capital flight to safer havens. The mounting problems in Cyprus have increased demand for alternatives such as gold and safer assets such as U.S. Treasuries. But the move to gold so far has been a slow walk instead of a spirited run. That could change next week if phase 2 of the ongoing drama in Cyprus doesn't unfold according to plan.

Banks in Cyprus will remain closed until at least Monday, the same day the country must come up with a plan to rescue its banks or lose the emergency funding that has been keeping them afloat. In a press release dated Mar. 21, the ECB said it has "decided to maintain the current level of Emergency Liquidity Assistance" until Monday. "Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF program is in place that would ensure the solvency of the concerned banks."

The European Union and International Monetary Fund have promised Cyprus 10 billion euros in assistance if the island nation can come up with an additional 5.8 billion euros. After rejecting the plan to tax insured and uninsured bank deposits, Cyprus is now racing to come up with alternative plans such as borrowing pension-fund assets, selling the island's two biggest banks and getting a loan or investment from Russia, whose citizens have large deposits in Cyprus banks. None of these options are very promising, according to experts, and most observers think taxing deposits will be part of any solution.

All of this falls under the category of "the more things change, the more they stay the same." It would seem that even after only three years of failed experience, ECB authorities are still trying to impose heavy-handed austerity type measures on the citizens of beleaguered countries. Italian voters voiced their clear displeasure with austerity in the recent parliamentary elections. Even some ECB members were forced to concede that the central bank's insistence on heavy tax measures against member countries aren't working. Yet once again we see Europe's leaders trying to impose an economy-killing tight money policy on failing nations. As per our recent discussions, Europe's troubles should eventually translate into higher gold prices.

Momentum Strategies Report

The stock market recovery is nearly four years old, and investors wonder if it will continue. While many experts have made forecasts for the coming year, few have been as impressive as the Kress cycles in projecting the market's year-ahead performance since the recovery began.

Each year I publish a forecast for the coming year based on a series of historical rhythms known within Kress cycle theory. Last year's forecast was remarkably accurate in predicting the pivotal market turns, including the June 1 bottom in the S&P.

Here's a sampling from last year's forecast:

"The first five months of 2012 will likely be characterized by greater than average volatility....This will create a level of choppiness to coincide, if not exacerbate, the market's underlying predisposition to volatility owing to the euro zone debt crisis...the May-June 2006 stock market slide could be repeated in May-June 2012. Our short-term trading discipline should allow us to navigate this volatility and there should be at least two worthwhile trading opportunities between [January] and the scheduled major weekly cycle around the start of June 2012. From there, the stock market should experience what amounts to the final bull market leg of the current 120-year cycle, which is scheduled to bottom in October 2014.

"Keeping in mind that like snowflakes, no two markets are exactly alike, the Kress cycle echo analysis for 2012 tells us to expect a final upswing for stocks in the second half of the year with the first half of 2012 likely to be more favorably to the bears, especially if events in Europe are allowed to get out of hand."

This is your opportunity to find out what the Kress cycles are telling us to expect for 2013. Subscribe to the Momentum Strategies Report now and receive as my compliments to you the 2013 Forecast issue.

In addition to that you'll also receive the MSR newsletter emailed to you each Monday, Wednesday and Friday. MSR provides reliable forecasts and analysis of U.S. and global markets based on internal momentum, cyclical and technical factors. Low-risk stock and ETF recommendations are also made based on my proprietary system of selection. Specific entry and exit instructions are also given for each recommendation.

[For the complete 2013 Kress cycle forecast for the U.S. stock market and the latest newsletters, subscribe to the Momentum Strategies Report at the link below.]

http://www.clifdroke.com/subscribe_msr.mgi

By Clif Droke

www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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