Off to Switzerland - He who leaps last loses his lolly
321gold.com
FIBONACCI COUNT
The Oct '02 low appears to be in 3 waves and the decline into the March 03 low, while a higher low, appears to have formed 5 waves. If the upward count starts from the Oct 02 low, the decline into March 03 would then be counted as a 2nd wave zig-zag. The sideway pattern in 2004 & 2005 would then be counted as a 4th wave flat, right? This count puts us now in the 5th wave from the October 02 low and in the later stages of a five year run, as early as the 2nd half of 2007. If the count starts with the March 2003 low, then we are likely somewhere in the 3rd wave, and with a 4th & 5th wave has still to arrive, most likely in the Spring/Summer of 2008. Dr. Henry Pruden (HankPruden.com), has done a point and figure calculation from the reverse head & shoulders pattern forming the base from the July 2002 low through the spring of 2003. It projects a run in the Dow to 14,400. Pruden has also calculated a number of Fibo price relationships that confirms this price objective
A 2x of the 7200 low also brings us to 14,400. The Dow lost approximately a Fibonacci 38% of its value or about 4500 points from its 11,750 high to the 7200 low. An upward rebound of 4500 x 1.618 = 7281. 7281 added to the 7200 low brings us again to the 14,400-14,500 area. The former high of 11,750 x 1.236 also targets the 14,500 area Dr. Pruden also calculated an alternate point & figure count taken from a higher, broader level of the fall 02/spring 03 base which projects to a less likely, but maximum possible target on the Dow to between 18,000 and 20,000. He offered these Fibo calculations that confirms these higher targets: ll,750x 1.618= 19,000. 7200 x 2.618 = 18,850. 4500 x 2.618 = 11,800, add 11,800 + 7200 = 19,000. This technical scenario is in line with Mr. Dent's more bullish forecast. The Dow is just challenging 14,000. If the Dow can manage to push to 14,400 by the fall of this year, back off and then push beyond 15,000, then these higher levels should become the ultimate target. Based on the macro economic conditions in the U.S, the EW principle of 5th wave equality, and the strong record of Fibo year counts throughout the last one hundred years, I doubt the Dow could push higher well into 2009, because of the muddled bottom, the time target has a 1 yr range between the summer of this year and the summer of next year [2008]. The price projections of about 14,500 & 20,000 offer the added advantage of being able to synchronize both time and price. If the market hits the 14,400 over the course of the next year, start listening for the song of the TO DA MOON!. If the market then continues beyond 15,000, expect the TO DA MOON! again to continue until we reach the 18,000 - 21,000 area
The Nasdaq acheived its virtually hyperbolic rise, and the magnitude of its decline challenged the psychology of even hot-blooded bulls. It would be hard to imagine a destiny under which the old bubble mania high could be much exceeded within the referenced time frame. Nasdaq from the 1974 low with a clearly evident 4 wave progression. Wave 2 appears as a flat and the 4th wave as a zig-zag. The would be 4th wave came no where near to overlapping the 1st wave despite the magnitude of its decline. Dent's forecast of between 10,000-20,000 on the Nasdaq in 2009 is impossible, but perhaps a quasi double top 5th wave might be achievable. October 2006 newsletter, Dent's "most likely" scenario for the Nasdaq was revised down to the double topping range of 5000. The Nasdaq Composite would require a doubling from 1900 level and the Nasdaq 100 large caps would require a tripling to achieve even this double top scenario Contemplating this scenario would only make sense in light of the most optimistic China and Emerging market developments, and with extreme difficulty when considering the Fibonacci 2008 influence
I think there is one thing which Bob Prechter, Harry Dent agree, that a great bear market, perhaps the biggest in generations may be looming in the not too distant future. Given the extent that markets have become global, there may be many cross-currents. Looking for safe havens and predictable overall returns will be more hallenging. It will be important to be prepared with wealth preservation strategies. Some may consider gold and other commodities, foreign bonds and diversifying out of the dollar. The more experienced might consider the short side of the market or CD's denominated in a variety of foreign currencies
References:
Prechter, Robert; The Elliott Wave Principle, Crest of the Tidal Wave, Conquer the Crash, and monthly Elliott Wave Theorists
Dent, Harry; The Great Boom Ahead, Roaring 2000s, Next Great Bubble Boom, October 2006 Newsletter
Pruden, Henry 1FTA Journal, HankPruden.com,"Hank's notes" |
