This looks like the end of down for this year.... see the WAVES? Those are the psychological crowd emotions.... predictable... now we should see a turn around in the crowd psychology... despite the fact you the tax payer is on the hook for a possible $7 trillion!
After the predictable psychology plays out the THREE waves up then the next push will start down... FIVE waves down.... One WAVE down... Then the next wave up (2)... then the next one down(3)... one more up(4)... then a long wave push down(5)... maybe it stops at 4000.
So when we get close to the line I would move my money back into cash. EVERYONE FEELS LIKE THE WORST IS HERE.... this is evidenced by the outrageous actions by the government over the weekend, including the president elect saying the worst is yet to come...
All this talk and effort is evidence that from the top down people are negative... commercials on TV... your buddies at work...
So now that there is sufficient negativity in the CROWD you will see the turn up...
All the while we were headed south, losing 46% of the Dow people were holding onto HOPE that it would eventually turn around....
But hope was lost by the powers that be and they had to act... promising to give up half of the the US GDP to 'save' the economy...
Picture this:
You are a business man... your business has done very well for several years... maybe a decade... but you begin noticing that your customers are changing. Many people want your product but can't afford to pay cash for it... so they begin using a credit card to buy your product... and suddenly you have a super influx of customers because more and more of your customers have a credit card...
"Wow!" you think. You start ramp-ing up the supply... even using credit yourself to buy supplies to create your product so you can keep up with demand.
Then you notice that your customer base is depleting... that the customers that are left don't really have a credit card... So you decide to give them the product under the arrangement that they would pay you monthly till it was paid off. That was going well until you started noticing the last group you gave the product too stopped paying the monthly payment... then worse you notice you have run out of interested customers...
But you have, like half of your money tied up in 'floating' the last group of customers and they all begin to stop paying... you start taking loans out to keep your business open... hoping that the customers start paying... then you end up maxed out...
About to go under in an attempt to 'save' your business a third party with some sort of 'authority' goes to your first customers... the ones who paid with cash... and raids their bank account to pay for part of the last 'non-paying' group's bill... you feel pretty good... for awhile...
But the people who had the means and the responsibility to buy your product out right with cash... will never ever come back to your business...
and you are stuck with a group of customers that want your product but don't have the means nor the discipline and responsibility to buy...
Unless of course the 'authority' keeps raiding the bank account of the ones who do...
I am not sure if the 7552 is the 'new' bottom or if there is another push down to the 7200 marker... the former is right in the middle of the range we talked about on 11-20 but with the president elect saying that millions of jobs are at risk next year and the IMF Chief saying the worst is yet to come... does that give enough negativity to traders and fund managers to dump stocks next week?
If it does then we will have the capitulation needed for a counter trend push... which the EW dudes say will be a multi-week or possibly multi-month counter trend push to the upside... it will not be a TREND change but a counter trend push... the over all trend is still down and will be for years. we will see new 52 week highs but no NEW multi-year highs...
Are we there or is there still pressure? Well nothing has changed in all the industries that support a robust economy... they are all contracting or collapsing...
Lots of selling today produced alot of Volume... in the Low of October there was high volume... and we had a few up days that followed... but we never recovered.
I count 9 new lows year to date... and zero new highs.
The crowd psychology is beginning to froth up around the crashing Markets... which should produce more down side pressure to culminate in an extreme escape from stocks that will really drop the market. Now for those of us who are still waiting to see the permanent turn in the market... there will soon be a gut wrenching fear that will drive us to join the dumping of our stocks... It will either be in the next few days... or maybe it will be at the next extreme push downward to the last time the DOW made an important top in the mid 90's... at 4,000.
The DOW... which, for our economy is the BEEF of the industries that support our economy... is down 46% from the top....we've never been HERE before...except in 1929... the Dow has lost 6,541 points from the top which is well over $12 Trillion! ... yes as much as the US GDP!!
The DOW just closed below the March 2003 low.... "Rats, if I had taken my money out of the market in 2007... I would still have it." says Warren Buffet under his breath.
This is not the bottom... I know, I know, I called a bottom in October... But there is too much pressure to the down side... so I repeat this is not the bottom... we will definitely see a new low below the intraday low of 7882.50 in October. It will be some where between 7200 and 7700... this of course is my Opinion... but it is also what the big shot Elliott Wavers say.
This, you know, is not the end.... the end is much further down.... but a new low this year is coming and new lows next year... and new lows the next year... with a few 52 week highs... we will see DOW 4000 in the coming years.. or maybe the coming year.
If you shorted the DOW in March.... you are golden.
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December, 2007
