Fred Voetsch

Why the Dow Is Headed to 6000

Actually, from a purely historical perpective it's possible to make the argument that the Dow will retrace all the way back to near 1,000.

It did so at the 100 level during the 30's and 40's after reaching that level decades earlier and then again at the 1,000 level in the 60's, 70's and early 80's.

In the seventies we didn't retrace beyond 500 but the market also had only risen by 2.6x over its 1929 bull market high while the gain this time was 14x the high in 1966. The bigger they are the harder they fall.

The trend average for the DJIA is, I believe, around 6,000, so having the the index fall back to 1,500 or so is not out of the range of possibilities. We certainly have all the pieces in place for this to happen.

I don't expect this to happen but I do believe it is possible and certainly it is not impossible given the tremendous leverage built into our economy.

Markets Suffer Through More Lies and Statistics

Notice that 2009 is green? Looks like green shoots to me!

Daily Earnings Surprise Summary: EPS Mostly Up, Sales Mostly Down

Earnings are not improving, they are not as bad as some estimates.

Look at the S&P 500 data at
www2.standardandpoors....

This is not filtered by anyone, this is real data.

"Q1 2009 - 498 issues (99.70% mkt val) rptd: Qtr ending -39.0% below Q1,'08 and -25.5% off estimates, sales off -16.5%, As Reported down -51.5%"

It's all bad except it's not as bad as Q4 2008.

Some Unpleasant Economic Data

Green shoots, green shoots!

...where's Cetin when we need him?

Economy-Wise, The Great Experiment Seems to Be Working

Interesting article.

The vast majority of experiments do not turn out the way they were expected to.

Nasdaq 100 Chart: Bullish Signs

Thank God you're not looking at anything silly, like valuations.

www.bullandbearwise.co...

...shows a P/E of 70 for the NASDAQ 100.

Commercial Real Estate Is Plunging

On Jun 26 11:36 AM joes wrote:

> There are six siblings in my family, three of us have been working
> from home for almost 10 years now, and I don't miss the office scene
> at all.


Many of these small businesses, such as mine, can easily move out of their small offices back to home without great pain but the pain to the CRE market is going to be great, and then these same people are less likely to eat out at all those trendy restaurants that have sprung up all over the place in past decades, fuelling the CRE boom.

All signs point to this as being a long-term trend - just a part of the overall deleveraging process.

S&P 500 in Correction Mode

blah, blah, blah, blah, blah....

The market NEEDS to fill that gap left open from September at 11,000 but it appears that it simply can't so do. If not we are in an unprecedented period in the U.S. stock market. We have never had a decline like that (11,000 to 6600) without a retracement that "filled the gap" to within less than 10%. Even the crash of '29 provided an excellent retracement.

I believe that we have a "sell of a lifetime" opportunity with nothing in our way on the path to well under 5,000 on the Dow and the likelyhood that we won't see 14,000 again for another ten years.

Expect the Unemployment Rate to Increase

"It’s likely going to be a long while before people start spending again."


And let's not forget about the debt that most people are dealing with along with the fact those who were doing pretty well and had money to invest are now down 40% from two years ago.

"The new normal" seems to be the phrase of the week and it sure is more accurate than "green shoots" but I have to wonder if things aren't still on a rather severe downward course, given all the data I have seen lately suggesting we are simply in a phase of relief in the the middle of a true depression.

Gene Inger calls this a "controlled depression" and that seems about right. I think the powers-that-be have managed to keep the financial structure fom imploding but the cost will be a longer despression with little opportunity for a recovery because all the failures are still alive and kicking while those who didn't fail are literally paying for their sins.

Global Economic Crisis: What's Next?

Wow! Excellent article and comments.

Commercial Paper Continuing to Vanish

On Jun 21 01:19 PM CautiousInvestor wrote:

> For me, it's unclear whether business is being turned down by banks
> or whether banks are not receiving loan requests.


My experience says it is both and more. I have a small business and despite having never missed a payment to a creditor in my life I have had credit lines pulled in over the past year.

I also am doing everything I can to pay down all the debt I can as fast as I can. I have no desire or need for more credit even though business is good for me.

Last but not least much of the debt is just disappearing as businesses go under.

Q109 Brought the Greatest Credit Collapse Ever

"Total: $13.87 trillion in all. The worst of all time."

And just about equal to U.S. GDP for a full year, if I'm not mistaken.

Indicator Update: Bull Market Correction

On Jun 22 09:04 AM Maxe Paul wrote:

> "I see this more as a correction within a bull market move than as
> the start of a fresh bear market."
>
> You will excuse me if i point out that this makes no sense at all.
>


His statement makes more sense than yours because he provided reasoning for why he believes what he believes, you simply dismissed his statement as making no sense and yet offered no reason or data.

That you disagree with him, as I do, is all well and good; that you dismiss his conclusion without sound reasoning is why I voted your post, "thumbs down".

Indicator Update: Bull Market Correction

On Jun 22 12:32 PM doctordoctor wrote:

> ...above 500 this market rally makes no sense at all. if we go back
> to a normal p/e the market must fall almost 90%!!! so no, this is
> not a bull market correction.


I have been all over the misreporting of the S&P P/E ratio but you don't value the market based on current P/E alone, you really do have to normalize it in some manner when earnings are negative or otherwise abnormal.

I agree with your initial statement that any price for the S&P 500 over 500 is high since I believe a normalized earnings should be $30 or $40 for the next year or two (or three) and a 10 P/E is reasonable in this era.

Indicator Update: Bull Market Correction

"At this juncture, given the relative strength of NYSE Cumulative TICK and intermediate-term new highs/lows, I see this more as a correction within a bull market move than as the start of a fresh bear market. A move below May lows, particularly accompanied by new 65-day lows exceeding new highs, would lead me to re-evaluate that stance."


You've provided some reasonable data for your stance but Dow Theory suggests that we are still clearly in a primary bearish trend.

What would make you "re-evaluate" your stance would simply be a(nother) Dow Theory confirmation of a continuing bear market.

My point is that Dow theory works, has worked like a charm in this bear market and has a long history of working.

Anyone who is interested in learning Dow Theory from the best and most experienced should look up the name, Richard Russell. He has a very reasonably priced newsletter that I highly recommend.