Reasoning:
Within a band of 1000 points, it seems the DJIA is more related to investors’
fears ands expectations, rather than objective micro- or macro-economic
realities. What it seems to me now is that as the Dow approaches 13,000
investors panic and think the market is over-bought.
When it
drops below 12,000 they reconsider because they feel it is under-valued. So it
fluctuates in this range, until we get some “hard” news that changes the band.
I don’t see any news that has not already been factored into the market. So it
seems to me that it will continue to fluctuate between 12 and 13,000 -
essentially.
But I
adjusted that to 11,900 to 12,700 because I think 12,000 is a psychological
bottom. But it has to drop BELOW it. Also I do not go as high as 13,000: I
would stop at 12,700 because at 12,700, investors who are being optimistic in a
rising market consider that to be, essentially 13,000. And they treat 12,700 as
if it were 13,000.
So
12,700 becomes a psychological top. That’s it. I don’t see anything to change
the original forecast of April 28 (indicated below).
Also the
behavior seems to follow another pattern: it drops
quickly and rises
slowly. I am guessing, but it seems that the
fast drops are due to fear/ panic. And after a sudden drop, then investors
slowly “test the water” and cautiously buy back in.
So it
seems there will be sudden drops (500 points in three days, for example) and
slow, gradual rebuilding (for example, 500 points in three weeks with some
fluctuations).
Today
the market is cautiously rising above 12,000, after dropping to 11,900. I would
guess it will do this for two more weeks until it recovers to 12,450. Then it
will fluctuate around 12,450 for three weeks, then drop back as low as 12,100
before starting it steady rise back to 12,700.
Then there will be one more panic in 2011 back
to 11,950 and end then, as predicted before at around 12,700 on December 31,
2011.
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