How crazy looking is this chart?


click for larger graphic

11000_dow_1

Chart courtesy of NYT

Ralph gets it right:

"It is more psychological than anything else," said Ralph J. Acampora, a longtime market forecaster who accurately predicted in 1997 that the Dow would reach 10,000 by 1999. "The average investor is now going to be impressed with the market’s new high," he added. "Now that they hear it and see it, that is going to bring new money into the market."

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Sources:
Dow Tops 11,000; First Time Since ’01
ERIC DASH
NYT, January 10, 2006
http://www.nytimes.com/2006/01/10/business/10stox.html

Graphic
http://www.nytimes.com/imagepages/2006/01/10/business/20060110_STOX_GRAPHIC.html

Category: Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Dow 11,000”

  1. PigInZen says:

    And that’s what it’s all about, correct? Bringing more money into the market.

    I was really interested in just how badly many of the “blue chip” stocks that are part of the DJIA performed in the time frame of that chart.

    BTW, this chart, coupled with the other you just posted about bond yields and the spread really reinforces that I think I should change my portfolio mix… More research needed…

  2. Larry Nusbaum, Scottsdale says:

    And, Ralph was just as correct when he called for NASDAQ 6000 when it crossed 5000 in March, 2000.

  3. Larry,

    He got the Dow 10K call right — I don’t have a link for the Nasdaq 6000 (which sounds ridiculous)

    Can you scare one up?

  4. B says:

    And what does Ralphy get for his prescient calls? The shaft because Prudential…er…..Wachovia……..doesn’t want someone who is a pragmatist.

    ie, Wachovia doesn’t want a senior technician telling investors to beware because that will slow down the flow of investor cash that will likely go to a competitor who tells their investors what a great time it is to invest.

    Btw, what is Ralph’s take on the overall market?

  5. Ralph J. Acampora’s market forecast for next year might be summarized as doom and boom. While he says he expects the stock market to rally between 5 and 7 percent in the first quarter, Mr. Acampora warns investors that they may be headed to a four-year low by the middle of 2006.

    ”I expect a very noticeable decline of somewhere between 20 and 25 percent,” he predicted. ”I am guesstimating that it will make a bottom or end in late third quarter.” He is looking at a year-end S.& P. price of 1,170.

    One investor’s bad news, however, can be another’s buying opportunity. And Mr. Acampora sees the beginning of another bull run. ”Stocks could be awfully attractive,” he said, speculating that investors will move toward large-cap equities and that growth stocks will outperform value. ”We are going to go crazy at this bottom.”

    Mr. Acampora, who accurately predicted in 1997 that the Dow would reach 10,000 by 1999, is a longtime forecaster but somewhat of a maverick among investment strategists. Instead of analyzing economic fundamentals, Mr. Acampora studies the market’s trading momentum, and he says he firmly believes history supports his views.

    For one, the current bull market run is more than three and a half years old; over the past century, the market has experienced a major cycle every four years with the exception of the stock market crash of 1987, Mr. Acampora said. Moreover, the stock market typically declines in the second year of any president’s administration.

    Mr. Acampora advises investors to sell their stocks in home builders, utilities and other businesses sensitive to interest rates within the first few months of the new year.

    Investors should wait patiently until the market slumps, he says, and then buy technology growth stocks, which have lagged during the recent rise. In the meantime, investors can enjoy a relatively strong market, in which the Dow will surpass 11,000 early this year. ”This is a gift from God,” Mr. Acampora. ”You got the last rally before your decline.”

    http://select.nytimes.com/search/restricted/article?res=F70B15FE3A540C708CDDA80894DE404482

  6. jw says:

    the dow chart is the classic picture that speaks a thousand words… but one thing that always strikes me about a given stock/index chart covering a period of years: imagine what the same chart looked like from, say, 1996 to the beginning point of the current chart displayed. from just a cursory review almost all of the stocks on the top and bottom would be flipped.

    DOW 11K is nothing more than a line buried in the charts of 30 names. but for those who want/need to make money the most educational aspect of that chart is the illustration of the role rotation plays over a given time frame.

    put another way, the worst performing stocks/sectors/styles (ie, value vs. growth) over a 5-6 year window tend to end up the best performing stocks/sectors/styles during the following 5-6 years.

    everything else is just noise.
    jw
    P.S. this chart also illustrates just how retarded cnbc has become. after watching about 20 minutes of their breathless coverage of DOW 11,000– complete with news flash graphics and music, as though the president had been shot– I turned the dang TV off. friends of mine tell me their painful obsession continued all day. so the market is up 10% from where cnbc originally obsessed with a big round number– dow 10k– 7 years ago…. big deal.

  7. B says:

    Barry,
    Don’t know how much free time you have to look at the charts but the NAS, SP and Dow are all in a long term rising wedge lasting over a year. It’s almost frightening how accurate the peaks and valleys have been on that wedge for all three averages. A very bearish formation. For those who are laymen(women), these formations typically break 2/3ish-3/4ish of the way into the wedge. We are at the top give or take a few percent. The NAS has violated the top by a small amount but that can seems to be the norm anymore with more people studying the charts. We get a fair amount of “fakeouts”/”shakeouts” for those who hold chart patterns with a very rigid view of interpretation.

    I don’t use charts exclusively but along with the other analysis I see, today may be Turnaround Tuesday. ie, A trend change. No one ever picks tops to the day but……why be boring?

  8. Trend Watcher says:

    Headline aggregate numbers like the Dow never tell the full story. It’s always useful to disaggregate and take a look at the detailed components that make up the aggregate.

    Normalizing a number like the DOW or the S & P by buying it in ounces of gold, or barrels of oil, or Euros is a way to get even more perspective as the earlier post on the Chart of the Day illustrated.

    Headline numbers never tell the full story as we see can also see from the BLS’ recent publication of the unemployment percentage and jobs created headline numbers for for December

  9. trendfellow says:

    all I care is GOOG and AAPL making new highs every day.. these analysis about the market is useless and thoughtless.. they are good for coffee table chit chat, but cannot make serious money..

  10. spencer says:

    If you had gone into cash in June 1999, when the Fed first started tightening, your portfolio would have increased from 100 to 121.2 at the end of 2005. But the S&P 500, with dividend reinvested daily, is exactly where it was in June 1999 at the end of 2005.