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DOW JONES – Stock Market Crash 2010

Admin — Sun, 24 Jan 2010 03:15:56 +0000

The Dow Jones Stock Market Crash of 2010 looks like it’s begun, with the third week of trade for 2010 showing a 5% decline from top (see Chart below). A stock market crash is defined as a sudden dramatic decline, of 10% or more, in the stock market index. So, another week like this, or a further 5% decline, would define the current trend as a stock market crash. The Dow Jones Industrial Averages has hovered around the all important 50% Retrace level (see Related Articles below) since mid-November, and has taken over 2 months to push only 400 points higher (4% up). These gains were quickly wiped out in a few days, ending the week on Friday 22 January closing at 10173 points. The Dow is currently trading almost 200 points below the 50% Retrace level, and looking to confirm that the bear market decline will continue. As written in previous articles (see Related Articles below) the Dow would need to break the 50% Retrace level on the upside, by a significant amount, to prove that we are in a bull market now, but it has not.
See also: DOW JONES – Stock Market Crash averted by Economic Recovery?

Dow Jones Chart – 22 January 2010
The 50% is at 10360 points, Gann (a master of technical analysis) tells us, that the 50% point is the most important of all. It is a good guide as to the strength of a particular stock or index. To prove the Dow Jones will go higher, it should break 5%+ higher than the 50% Retrace level, or 10880. Only then, we can all agree in basic Gann stock market technical analysis terms, that the market is continuing its bull run, and has been miraculously resurrected again as the immortal bull!

This last week has broken the sideways snail-paced rally of the last few months, and put the Dow back below the 50% retrace level again. Another strong confirmation that the Dow Jones has reached a major high, and will continue its decline, is that the January 2010 top completes a Gann 10 year cycle exactly, from the January 2000 major high, established just before the Tech bust (14 Jan 2000 to 14 Jan 2010 – 10 years to the day). If you are thinking of trading Dow Jones index on the short side, a nice spot to place your order is around the 10360 mark, to catch the inevitable reaction rally! Place your stop 100-300 points away, or to be sure, at 10880. On the way down, there looks to be some support at around 10050, then 9600, 9100, 8200, 6900, 5500. President Obama restricting bank’s investment in hedge funds is supposedly to blame for the market’s recent drops, but any story will do, when its due its due!

As written in previous articles (see Related Articles below) the Dow Jones (and world stock markets) are still in a bear market, yes, still on a long term cycle of decline, after the most exuberant period of financial growth and debt increase in history. The Dow Jones Stock Market Crash 2010 looks quite likely now, and will be longer and more severe than expected. As we have just seen the longest rally in the current cycle, we are about to witness the longest decline (in time) of this bear market cycle. This phase of the decline should last a minimum of 2-3 months, but with a few short-lived rallies, may go much longer. Mid-June 2010 looks like a pivotal time point for the year, and a possible bottom of this wave down. This is the “painful” part of the cycle, when total lack of hope sets in, as markets and banks unwind with unstoppable losses accrued daily. Lack of faith in the financial system sets in and the spiral goes more out of control. Credit evaporates and cash becomes scarce. Corporations fall, banks go broke, and government debt defaults begin. World leaders grasp at straws trying to regulate a working financial system into play.

Robert Prechter has a lot to say about deflation due to enormous debt growth. One of his main recommendations is to buy Gold as protection – Gold is always seen as a safe haven in turbulent times, and usually increases in value at such times.

How low will the Dow Jones Stock Market Crash go? Pretty low, as there are enormous amounts of debt built into the system, and all this debt needs to be resolved in a deflationary environment. Some analysts have forecast an extreme low on the Dow Jones of around 1500 points, this looks likely. The closest timing we could get to a possible bottom of this cycle, is late 2012, completing a Gann 10 year cycle from the 2002 major low.

DOW JONES Major High November 2009

Admin — Sun, 22 Nov 2009 03:12:04 +0000

The Dow Jones Industrial Averages has finally hit the 50% retrace point this week, making what appears to be the major high for 2009, or final top of its massive bear market rally – see Chart. This top was mentioned in previous articles here, as likely being around the level of 10,360 points, the 50% retrace of the Dow’s entire run down, from the 11 October 2007 extreme high, down to the 9 March 2009 low. How high can the Dow Jones go? These articles show why we are technically still in a bear market:
DOW JONES October 2009 Rally breaks 10,000 points
DOW JONES Major High September 2009

The Dow Jones index shot up on Monday and hovered around the 50% point most of the week, unable to gain ground, before falling back below it late in the week. November 20 was previously mentioned as one of the significant time points to look for a reversal. This current time point is the most significant of all, especially when coupled with the price level, as will become evident. The Dow has finally recouped 50% of all losses shed during the global economic crisis, and in 50% of the time it took to lose them! Yes, you heard right, the unpublicised fact that 50% gains have occurred in exactly 50% of the time it took for the losses. This is why this current point is the most powerful for a reversal. In fact, the halfway point in time falls this weekend, so the actual top could be last week or the coming week, but either way, this week will prove the reversal! Gann would call this point, a “Perfect Square” – 50% in price, meets 50% in time.

In addition to this, we have just completed 110 weeks from the all time high, and as most technical analysts would know, 110 is a twin Fibonacci 55. Also, multiplying the March low of 6440 points, by the Fibonacci ratio of 1.618 gives us 10,420 points, which is almost exactly the high reached this past week. And finally, the Dow is sitting just under the 1994-2002 bottom trendline. These are all very strong indicators that we will see a major reversal on the Dow this week – so if you are thinking of going short, this is the time to load up – SELL!

In the extremely unlikely event that the rally continues (a miracle of economics), I would highly recommend buying Gold as the ensuing inflation will be unbelievable and currency (especially $US) will become almost worthless. Eventually the stock market drop would be a devastation, rather than a correction.

DOW JONES October 2009 Rally breaks 10,000 points

Admin — Thu, 15 Oct 2009 09:48:26 +0000

The Dow Jones Index (14 October 2009) rose above 10,000 points for the first time since early October 2008, as US stocks powered higher. Investors cheered at the New York Stock Exchange, as the Dow Jones Industrial Average broke the psychological 10,000 point barrier, finally closing at 10,015.86 points. This is the first time the index has climbed above 10,000 points since early October 2008, when the stock market sank rapidly following the collapse of Lehman Brothers a few weeks earlier. See also the November Update:
DOW JONES Major High November 2009

The time points projected in the previous article DOW JONES Major High September 2009 have been passed, and in analysis terms, specifically Gann analysis, the Dow Jones would be described as being overbalanced in time – note the time points mentioned in that article, still all proved to be significant points. The target price level mentioned in that article has NOT been hit yet, 10,360 points, and this is the target level to break (by a significant amount) in order to prove that the bear market has ended.

Due mainly to fiscal stimulus, currency devaluation, and continued pump-priming by US (and worldwide) government, the current rally has over-extended in time, by a little. The crucial 50% retrace from Exreme High to Extreme Low (at 10,360 points) however, has not been breached, which means we are still technically witnessing a rally in a bear market. This will be noted as the biggest rally of the current bear market on the way down.

All the stimulus and fake value (currency) creation in the world, can not stop the inevitable unwinding of world markets – fuelled by rapacious greed and excessive debt – the accounts must eventually be balanced. The attempts by government to avert potential disaster, have only set us up for a bigger fall. The rebalancing will be more severe, and much longer in duration, quite likely leading us into Global Depression.

Significant time points to look for a reversal:
October 26-28, November 20, December 8-21

It is extremely unlikely that the Dow Jones will go above 10,360 points by a significant amount. If they pull off the miracle of the century and it does, then we will likely see a tremendous devaluation of currency followed by unbelievable inflation. Gold is the investment of the wise, and will continue to rise in value considerably into the future. If you have substantial money to invest and don’t want to see it eroded by currency devaluation (which is happening anyway), buy Gold now, and hold it.