Time to SELL!!!
2000, 29 Aug, Tuesday (Hey peeps! Note the date!)
Stock market (DJIA) reaches a high of about 12100, just barely over its all time high in January of this year. Smart money sells everything, expecting a bottom on/about Tuesday, 24 Oct 2000.
COMMENTS: 1. (000812) As of this date, all things point to the Dow continuing its recent bounce from its recent bottom. I believe that one of two things will happen in the next few weeks, first that the Dow will stall just below its January high, or second, and more likely, that it will stall just over the high, yet under 12100. Either way, if I am right, the end of August will be a VERY good place to SHORT the market. As of this date, the Dow is at about 11000. Worst case scenario would be for it to crash back to about 7750 on 24 Oct 2000, a very steep decline from its projected high. All we can do is to wait and see. As for me, I will be SHORT beginning the end of August just in case this is correct, with open orders to cover my positions on 24 Oct 2000.
2. (000814) If the DJIA does by chance SIGNIFICANTLY exceed 12100, the NEXT target high is 16900. As to when that could/would happen I do not have the foggiest idea. My best GUESS at this time would be 6 August 2002. However, I reserve the right to change this GUESS at any time as more info becomes available.
3. (000826) The DJIA was at 11247 yesterday. Since the projected high point is now only two business days away, I see no way that the Dow will exceed its January high this year. In addition, chart patterns in BOTH the Dow and the S&P are forming rising triangles, getting closer to the point every day. Soon, probably VERY soon, they will break out of these triangles. MOST of the time, rising triangles indicate that prices will break out to the DOWNSIDE. Since these triangles have been forming for several weeks, and they are relatively steep to the upside, I project that when the markets break out of them, that they will go down TWICE as much as the recent rise. In the S&P, this calculates out to going from about 1533 to about 1317 for the FIRST dip, which, if you are short ONE S&P contract at 1510 and cover at 1380, converts into $32,500. If you are unable to risk the S&P, you could try the mini-S&P, which using the same drop, converts into $6,500. No matter what, put a stop at 1540 just in case I am wrong.
Another possible profitable play, if you would rather be long than short, would be to buy puts in the DOW or S&P, or to buy calls in GOLD and SILVER. You could also buy futures contracts in GOLD and SILVER. The contracts could be a little riskier, but since they are more liquid, it is not likely that you will be locked into them when you want to liquidate.
If you think that the Dow will continue going up, please consider the following facts. As anyone should know, the industrialized world runs on oil. As of today, crude oil is at or near record highs, AND LOOKS LIKE IT WILL GO MUCH MUCH HIGHER. Unless we get a miracle, it is too late to stop the rise of crude oil to approximately $64 per barrel from its current $31 per barrel. We are just now starting to see the effects of this ripple throughout the economy, and there is no hope in sight for lower prices any time soon. To make matters worse, there WILL be a heating oil shortage this winter EVEN IF WE HAVE AN ABNORMALLY MILD WINTER. Think about what THAT will do to housing prices when people are spending between $1000 and $1500 per month for heating oil, or even more if the winter is abnormally COLD. Not only will that cause housing prices to drop, but it will also cause a glut of large, hard-to-heat houses on the market. Now, if you don't use heating oil for heat, just remember that pretty soon you WILL start to see price rises of the SAME magnitude for natural gas, coal, electricity, AND ALL OTHER ENERGY SOURCES.
Another thing to think about is autos and what high oil prices will do there. This world depends upon a vast transportation system, ALL consuming massive amounts of energy. When gas prices get to $3 per gallon for the cheapest grade of gas, you will see massive layoffs throughout the transportation industry and its supporting industries. I think gas prices could EASILY go to $5 per gallon, ESPECIALLY IF THE GOVERNMENT TRIES TO RATION IT. Bottom line is that there is NO VISIBLE WAY THAT THE DOW CAN KEEP GOING UP. In fact, it is beginning to look like that there is no way for the Dow and the other indices to do anything except come crashing off their current highs.
4. (001020) The DJIA has been extremely WILD for the last several days, moving two, three, and even FOUR percent in ONE day. It looks like that we may have one, maybe two more severe down days before it turns around for a few weeks. Even though the DJIA is currently about 10140, it is still quite possible for it to drop to my target price of 7750 noted above. If it is going to drop to that level, it should happen next week, but not later than the last day of this month. We don't have much time left, so the next week could be an extremely wild ride.
I am still short, but am making plans to become flat or long next week. As noted above, Tuesday, 24 Oct 2000 is my target day. Once it arrives I will be looking for good places to become long. If the DJIA gets to 8100, it is time to BUY, BUY, BUY!!! The target price for the S&P is about 1000, so if it drops to anywhere near that level, I will definitely be BUYING, BUYING, BUYING!!
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Written 12 Aug 2000. Posted 12 Aug 2000.
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