Dow

Continuing the review of the Dow prediction from August 11th-

Watch for the Dow to crash through support levels at 10,636 then 10,366 before it meets some resistance at 10,098 with a slight bounce around mid-September. Then all hell breaks loose as it violently crashes through any support that is offered realizing 300-1000 point drops as it rejoins the downward trend in October before finally meeting firm resistance at 9686. When that resistance finally gives way, say around November, look for increased panic as assets are sold off left and right to meet the dread margin calls as foolish investors get scalped.

On the 24th, we looked further -

Now that we have our 140 point haircut (134 points today to close at 10,040), There is a real strong chance that the Dow will give up enough to get to our projected low of 9686. However, we run smack dab into two problems -

• The psychological barrier of 10,000
• The previous low of 9686.

In order to get to 9686 we need to realize a 350 point drop from Tuesday's level. That is quite a dip. But I think it's important to realize that there’s not a whole lot propping up the current price level.

So we have several scenarios that are possible:

1. The market gives it all up in one massive shot. Say down to 9620 by losing 350 points in one or perhaps two sessions. Given the way the market kept bumping into the 10,098 as though it were a ceiling (red line on the chart above) lends credence to this thought.
2. The market takes it's time and gives it up slowly over the course of the next few weeks.

The latter scenario has been the action plan of choice over the last year, but the trend is towards the former scenario. I'm going to play it safe and go with scenario 2.

More importantly, once that barrier is breached, (say by early-September) I fully expect there to be a massive ramp job from 9620 bringing us way back up to around 10,200. (A 600 point gain and in line with the predictions I made earlier. I would think this could sow some massive confusion as the Dow darts back and forth between 10,000 several times.

The Real Effect
So far, we are right on target. As the market has fluctuated around the 10,000 level. If this target holds, and there is no reason to believe that it won't, we should have some major stock rumblings in very short order here.

Update - 
The Dow closed up 255 points, a major move indeed and it could fulfill the ramp job I was talking about, just from a much higher position. For now, I laugh at your pathetic little jump as stocks are now massively overbought and have that much higher from which to plunge!