Investors Cracking Up a Bit...
Investors' resolution cracked a little today as both Durable Goods Order and Jobless Claims turned in much worse than expected (I knew consensus was way too optimistic on that). Total equities Put Call Ratio also surged today after 6 consecutive down days as options traders rushed for put options. In fact, the US market took off negative right off the line and then ended with the Dow down 226 points. Investors were obviously also uncertain about the way the GDP number is going to turn out tomorrow (see economic calendar) and most importantly, how will the market react.
On the technical front, the Dow continued its short and intermediate term neutral trend today without surprise, trading within the neutral channel that I pointed out yesterday. Today's drop also happened on lesser than average volume, which did not threaten the short term bullish momentum, yet.
On the technical front, the Dow continued its short and intermediate term neutral trend today without surprise, trading within the neutral channel that I pointed out yesterday. Today's drop also happened on lesser than average volume, which did not threaten the short term bullish momentum, yet.
Labels: 2008 crash, fundamental analysis, technical analysis
posted by Jason Ng at 6:51 PM
1 Comments:
US markets have seen an intermediate bottom. From here on it is headed northwards. Dow Jones Industrial Average(DJIA) had reached the bottom at the level of 7400. Without violating this level, from here on the assured upswing will take DJIA to 9600 level. This means that short term investors can pump in money at 8000 level to reap benefits till DJIA reaches 9600. At this level it will be prudent to book profits for all shades of investors. The percentages of profit to be booked will be the differentiators between short, medium and long term investors. Short term investors should book 100% profit at 9600 level, whereas medium term investors should book 50% profit. Investors with a long term view should book at least 30% profit, if not more. But in all fairness DJIA has the potential to reach 10300. So after booking profits at 9600 one should be on the look out for clear buying signals around 8800.
The pertinent question that arises is - how have I arrived at this conclusion of the bottom? Well in DJIA charts, if we take the wave top around mid May 2008 the value is 13100 and the bottom is at 10800 around mid July 2008. That's the first leg of the wave. By that count if we apply Elliot Wave Theory, the pullback should have taken it to the level of 11700. However in actuality DJIA pulled back to 11800 in the beginning of Aug 2008. For the second leg of the wave, downturn from 11800 should have taken DJIA to level of 8100 as per calculations. In reality DJIA reached 8150 in the last week of Oct 2008. The pullback from here should have reached 9550 but on ground DJIA reached 9700 at the start of Nov 2008. As per Elliot Wave Theory the third and final leg of this wave should have culminated at 7450 , and so it did in the last week of Nov 2008. Completion of the wave starting at level of 13100 and terminating at 7450 signifies that a minimum upswing of 38.2% is guaranteed from the bottom of 7450. And that upswing should safely take DJIA to 9600.
Let me be honest with you. I have not given detailed explanations for the points in preceding paragraph. I believe that detailed calculations on the above predictions may confuse. However if anyone desires to seek detailed calculations on the expected movement of Dow discussed, I shall only be glad to oblige. Do feel free to seek clarifications on the denouement at the following places:-
Email: archdeb@gmail.com
sites : http://suradeb.wordpress.com/
http://archana-markettrend.blogspot.com/
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