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DJIA Price Pattern Suggests a Grim Outlook for Stocks
As of its March 10 close at 11,740.15, the DJIA is down 17.12 percent
from its all-time high set on October 9, 2007. And its current price pattern
looks much like a bump and run reversal, a bearish formation, suggesting
that much more downside is on the way.
An additional 10 percent downside from 11,740.15 would put the DJIA at
10,566, which is at the intersection of the dashed downside path (red
on chart) and the green trendline marked A. This downside path is very
likely to occur as the economy continues to slump.
Given a moderate recession, the DJIA could drop another 20 percent, putting
the average at 9,392. And a very serious recession could drive down the
DJIA another 30 percent from today's close to 8,218, which is around the
intersection of the red dashed line and the green trendline marked B.
This is an ugly stock market.
Related Articles:
Believe In Price Charts
- Particularly in Volatile Times
DJIA Is At the Edge
of a Cliff
Price Patterns -
Bump and Run Reversal Top Defines Price Bubble
Posted March 10, 2008.
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