Crash Update - 2004
I have read in the newspapers this weekend (16th May 2004)
of there being several similarities between the 1987 stock market crash and the
current Dow Jones. With this in mind, I have taken another look at the Dow chart
and have also compared it to the 1987 chart, and also the 1929 chart. At first
glance, there are some similarities between the 3 charts. The 1987 and 1929
charts I found in the book, The Spiral Calendar, are virtually identical before
their crashes. They also crashed around the same time of year, i.e. October.
Overlaying the 2004 chart to date, the advance/decline patterns are very
similar. Does this mean that we are about to see a huge decline in stock prices?
Taking a look at the 2004 Dow chart, I think not. The
decline from the year 2000 high of 11853 is very volatile, choppy, and
impossible really to label as an Impulsive Wave. In other words, it appears to
be a correction in the main trend (up) not part of a new bear market.
I have the correction labelled with a WXY shape. Each leg
has 3 obvious sub-waves (abc). Up from the 2002 low has topped at trendline
resitance and could be the top of another corrective phase - the second Wave X -
to be followed by a large decline in a Wave Z. This would lead to lows under Y's
7180. More likely, I feel, because the advance off 7180 is smooth and
trend-like, is that 7180 was an end to the large correction (WXY). And that the
market has topped at the high of Wave 3. The recent decline from 10650 on
February 04, is correcting this advance, falling to a maximum low around the
high of Wave 1 at 9040. This would also be a 50% retracement from the bottom of
Wave 2 to the high of Wave 3. From there, I would expect a recovery back through
the year 2000 highs to 12,000.
Perhaps, then, this would be the end of the Grand
Supercycle and we really would see a stock market crash! (90%)
Update December 14th 2004
Here is an updated
weekly chart of the Dow nearest futures contracts. Wave 4 held the maximum
predicted low of 9040 and broke to the upside heading for highs around 12,000.