Dow Jones Industrial Average

I have written about the Dow Jones Industrial Average before. I also made a gutsy prediction that the DJIA would hit 14,000 by February 25th, 2007 . I still stand by that forecast.

But first things first. Clearly in order for the DJIA to get that far, the first thing it has to do is break out to a new all time high. I believe this moment is rapidly approaching. In fact it may come sooner than we think. We may even see DJIA 12,000 by the end of April. I am expecting wide price volatility and ‘heated market action’ in the DJIA.

A new all time high for the DJIA is a big deal because it represents to a large degree the general publics indicator of the ‘market’. Plenty of other indices have hit new all time highs but the DJIA has lagged. Could the DJIA hitting new all time highs be the final piece of the puzzle that helps to accelrate the market going into 2007? It is possible. But I will take things a month at a time.

How to make money from the upcoming DJIA breakout?

The dow diamonds are a decent play here in my opinion. The 2007 115.75 DIA Call option seems reasonable here. It is currently priced at 5.00 .

The price structure of the DJIA chart is telling me we will see an acceleration in price. That conclusion simply comes from experience and a close look at the price action.

In my previous post I talked about Coca Cola entering a new bull market. That should help the Dow a bit with its breakout and vice versa. The structure of the DJIA and my forecasted breakout is consistent with Coca Cola breaking out as well.

HEADS UP and WAKE UP!

Exciting market action is dead ahead!

I still think a huge move is coming for the Dow Jones Industrial Average. Not a one day wonder, but more like a steady sloping upward trend.

There are a huge number of buy stops just above 11,000 , that once activated will send the market a lot higher than most people probably believe at the moment.

The chart of the Dow since 2000 is quite compelling. The structure looks supportive of this type of move. But here is the kicker, although we will see very large numbers on the Dow (12,000, 13,000, 14,000, 15,000 ….) I suspect by the time we get there inflation will be worse than it is now. So the large numbers may be deceiving.

Anyway, here is an interesting link I found from Barton. He writes and charts about the Dow, Nasdaq and S&P. Needless to say I agree in good part with some of his arguments.

Barton’s Asian Stock Market Charts

I am going to post a chart here which should give you a rock solid dose of long term thinking. Ponder for a moment your long term opinion on the market.. do you have one? Bearish, Bullish or in between? It goes without saying that a fairly confident long term forecast can help so many of your trading decisions between now and the end point of your forecast…

But a long term forecast is extremely difficult to gauge with accuracy for the same reason that a long term forecast of weather patterns is just as difficult… However, I do believe that the market is easier to forecast on a long term basis than the weather :) .

The chart at the below link is one I made of the Dow Jones Industrial Average.

CHART

Note that the Dow Jones Industrial Average has been up until TODAY in a sideways basing pattern with 2 FULL YEARS of CAUSE. We also have a large symmetrical triangle pattern that is nearing the apex.

The inset chart is the 8.6 global business cycle model. This cycle model has over time made some STUNNING forecasts. Notably, many of these stunning forecasts were in existence decades before they even happened!

Note in the chart the 1998.55 peak forecast… which you probably remember as being the beginning of the asian currency crisis. That peak, July 20th, 1998 was an astounding forecast. It was perhaps one of the most famous and precise forecasts of the 8.6 year cycle model. The next most famous one was the precise forecast of the 1987 peak and crash.

The chart I have drawn shows the the cycle model also accurately predicted the major low of the bear market in 2002.85.

The next major peak is forecast to be 2007.15 or February 25th, 2007. Simple trendline analysis predicts about 14,000 target on the Dow Jones Industrial Average by this date.

Mark this date on your calendar! February 25th, 2007 !

An extraordinary run is coming that will take the Dow to new all time highs!

Peace.

Thomas