Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Dow Jones Stock Market Forecast 2009 - Update1

News_Letter / Stocks Bear Market Feb 26, 2009 - 04:52 AM GMT

By: NewsLetter

News_Letter February 25th , 2009 Issue #15 Vol. 3

This 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 Market Oracle Newsletter
February 25th , 2009            Issue #15 Vol. 3

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Best Analysis

Dow Jones Index Stock Market Forecast 2009 - Update1

Dear Reader,

This 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.

Download your 60-page Deflation Survival Guide now

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.

Download your 60-page Deflation Survival Guide now

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.

Subscription

You're receiving this Email because you've registered with our website.

How to Subscribe

Click here to register and get our FREE Newsletter

Forward a Message to Someone [FORWARD]

To update your preferences and access the Newsletter archive [PREFERENCES]

How to Unsubscribe - [UNSUBSCRIBE]

 

About: The Market Oracle Newsletter


The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2009MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

Terms of Use | Privacy Policy

Copyright 2009 MarketOracle.co.uk

© 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