Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Larry Edelson- Dow Stocks Bear Market Ended in October at 7884

Stock-Markets / US Stock Markets Nov 06, 2008 - 11:51 AM GMT

By: Money_and_Markets

Stock-Markets Best Financial Markets Analysis ArticleWe have a lot of ground to cover today. So forgive me if this issue jumps around a bit. But there's just not enough space in this column for me to cover everything in as much detail as I would like to. Yet there's so much money to be made in the next few months that it's mandatory I get my views out on the following topics, even if I have to be brief:

  • The Dow …
  • Emerging economies, and …
  • Gold and oil

Having said that, let's get right to the heart of the matter, where I think you can make bundles of money in the months ahead …

The Dow May Have Hit Rock Bottom …

Based on several technical indicators that I monitor, I am willing to go on record with the following statement …

The October 10 nominal — meaning the non-inflation-adjusted — low in the Dow Jones Industrials, at 7,884.82, may well end up as the low for the entire bear market.

I know you're not hearing that anywhere else. And a lot of people will call me certifiably insane.

But that's just fine with me. It wouldn't be the first time …

  • I was pretty much on my own and labeled a madman when, at the bottom of the Crash of 1987, I called for the Dow to make new highs within three years.
  • I was also a lone, crazy voice back in 2000 when I said gold was bottoming at $255 and headed to new record highs and that oil was a steal in the low teens and headlined into a rip-roaring bull market.
  • I was pretty much on my own when, in early 2001 — mind you before 9/11 — I called for the dollar to enter a multi-year bear market.
  • I was also pretty much all on my own when, in late 2006, I said that if the Dow broke through the 11,400 level, it was headed to 14,000.
  • And at 14,000 in October of last year I told everyone who would listen that the Dow had peaked … to get the heck out of almost all stocks … and the U.S. economy faced a wakeup call from hell.

So I don't mind being a lone voice now either. In fact, I prefer it that way. Some of the best market forecasts are made when you have almost no company in your camp.

Mind you, even if I'm right and we have seen the lows in stocks, it does not preclude the possibility of future sharp downdrafts from occurring. Or even a retest of the lows that will make me look foolish.

But right now, I am confident that the rally you're already starting to see in the stock markets — and in commodities — could continue for several weeks, possibly even several months.

It could easily send the Dow back to the 12,000 level. Gold back to $900. Oil back to $100.

And that's just for starters!

Does all this mean that I believe the credit crisis is over? No, it's probably not over.

So …  

Let's Look At the Markets and Economy Realistically And Objectively as Savvy Investors and Traders …

A. Stock markets lead fundamentals. It's perfectly normal to expect stocks to bottom before the fundamentals of the economy start to look any better.

The Dow bottomed in 1932. But economic numbers didn't head up until 1935.
The Dow bottomed in 1932. But economic numbers didn't head up until 1935.

Indeed, during the Great Depression, the Dow bottomed in 1932. But bad economic news continued to stream out for another three years, with economic stats not showing any signs of turning up until 1935.

In the next great bear market, the 45% loss in the Dow between 1973 and 1974, the Dow rallied a whopping 53% from its 1974 low — even as bad economic news poured out of the economy for the next 18 months.

[Also note that toward the end of 1974, after the Dow had bottomed , inflation started to spike higher , reaching 10.3% by early 1976. Inflation continued rising all the way through 1980, blasting gold skyward to $850. The main cause: Just like today, massive money pumping by the Fed.]

Another, more recent example comes from Sweden. In the early 1990s, Sweden experienced a housing bust worse than what's happening now in the U.S. Bad debts related to the housing collapse reached 12% of Sweden's GDP, far greater than what we're seeing in the U.S.

In September 1992, Sweden's government injected capital into failing banks and implemented blanket depositor insurance.

In the 12 months that followed, Sweden's stock market soared 42%, even while the economy continued to recede.

Bottom line: If you're waiting for bad news to stop streaming out of the economy before investing or speculating again, you're going to miss the profit boat, big time.

Fact is, the stock markets — and indeed most markets — look ahead, not backwards. Always keep that in mind.

B. As I already pointed out to you in my last Money and Markets column , and on several other occasions, the Dow, and indeed all assets, must be looked at in inflation-adjusted terms and, more precisely, in terms of gold to truly understand their values and to put them into historical context.

And in that sense, at its nominal low of 7,884.82 on October 10, the Dow in real terms had already lost 77% of its value and was trading at a real inflation-adjusted equivalent of about 2,550.

When looked at in real terms, that also means that the bulk of deflation is already past us. Ditto for commodities.

Put another way, it also means that the Fed, indeed all central banks' attempts to reinflate asset prices, should soon begin to have an impact on markets.

After the U.S. went off the gold standard in 1971, the Fed and other central banks printed money like crazy.
After the U.S. went off the gold standard in 1971, the Fed and other central banks printed money like crazy.

That's what happened after the 1973 to 1974 bear market, which I believe is a better analogy to today's economy and markets than 1929 to 1932.

Reason: As I have oft mentioned before, during the Great Depression, the U.S. and global economy was shackled down by a gold standard. Asset prices only started to rise again once the dollar was devalued by raising the official dollar exchange price of gold.

In the 1973 to 1974 bear market we did not have a gold standard. So the Fed and other central banks printed money like crazy. And even though the economy remained in a severe recession for several more years — inflation went through the roof igniting a rally in both stocks and commodities.

The same thing is about to happen again.

Another reason I believe big rallies lie ahead …

C. All of the technical indicators I monitor strongly suggest that both stocks and commodities are more oversold than they have been in decades.

On many indicators, the Dow is more oversold than at any time since 1932.

On other indicators, it's more oversold than it's ever been.

And on still other indicators, it's more undervalued and oversold than it has been in at least the last 50 years.

Also consider the following: On October 10, 87% of all stocks on the NYSE hit new 12-month lows.

That kind of downside breadth exhaustion, where more than 50% of NYSE stocks hit 12-month lows at the same time, has occurred only four times — in 1962, 1966, 1970, and at the crash low of 1987.

Each one of those data points was at or within a few weeks of a major bottom.

Similar technical indicators and data show that most commodities, including the majors — gold, oil and grains — may have also made major lows.

D. Additional bullish supporting evidence is coming in from my technical and cyclical models on foreign stock markets, especially India, China, Hong Kong and Singapore .

All of my indicators on those markets also suggest powerful rallies lie ahead. The most bullish of them: India and China.

So what to do right now?

First, as bullish as all of the above sounds, don't rush out and start buying stocks hand over fist. More confirmation is needed before getting aggressive.

Second, you'll want to be very selective.

The best performing stocks going forward will be, unquestionably …

  • Natural resource stocks. Based on companies producing goods that are needed by people in good and bad times. Goods with intrinsic value.
  • Defensive consumer staples, similar in a way to natural resource stocks in the sense that they represent products that are always needed. Food. Beverages. Drug companies. Household product companies.
  • And yes, emerging markets, which will come back with a vengeance.

For right now, I recommend getting your toes back in the water with exchange traded funds (ETFs). Consider buying them on the next pullback you see, and use a protective sell stop 7% below your entry price to help reduce risk.

My favorites …

— The iShares MSCI BRIC Index Fund (BKF)

— The Dow Diamonds ETF (DIA)

— The Energy Select Sector SPDR (XLE)

— The SPDR S&P Metals and Mining ETF (XME)

And for more specific instructions, timing and higher profit potential plays, be sure to subscribe to Real Wealth Report .

Best wishes,


This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and Markets Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


21 Nov 08, 12:42
Larry Edelsons Busted Dow Forecast!

Your forecast is BUSTED ! Didn't take long did it ? less than 3 weeks for the Dow to break your 7884 low call.

NO matter how you word it the dow falling 7500 busts your forecast. Now what ?

Another the low is in at 7,500 ?

Then again later on?



Jack Wynstone
05 Mar 09, 20:33
Great call Larry


"The October 10 nominal — meaning the non-inflation-adjusted — low in the Dow Jones Industrials, at 7,884.82, may well end up as the low for the entire bear market."

Great call man, how'd that work out for you? Oh and nice call on oil too. LOL


Post Comment

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

6 Critical Money Making Rules