As I was looking to the Dow/Gold ratio & based on my estimates of Gold correcting down to $1250/Oz more or less and a rally in the Dow Jones to about 12500 points ,the ratio should then be near 10.
Of course the final target for the Dow Gold ratio should be close to 1, something like 5000 points on the Dow Jones and $5000/Oz for Gold before 2015.
In the meantime,this is what should happen on the chart of the Gold Dow ratio:
This is how this should work on Gold and The Dow Jones :
Thanks to the long term chart of the Dow Jones that Duuuuuude posted in his new blog (who is using Prophet Charts) I had thought of something worth showing on ETF Corner : How does a Secular Bear Market bottoms ? What kind of basing pattern does it usuallt follow ? In the chart of the Dow Jones since the early 1920, you can clearly see the patterns. They all look like long term inverted Head and Shoulders bottoms. With a selling climax (H). Usually the right soulder (S) appears a few years later after the selling climax. The new Secular Bull Market does start roughly ten years after the selling climax (H). Dear Kids, this chart says a few things :
A) The lows in March 2009 could be the selling climax (H) of the Secular Bear Market that we find ourselves in !
B) The right shoulder (S) of our Secular Bear Market could be within reach in 2014-2015 or even before, and could be tested a few times near 7500 points on the Dow Jones.It could also be the next secular low.
C) The start of a new Secular Bull Market will be in 2018-2019 until 2040.
I always love to look at long term chart and draw comparisons, because eventhough history doesn't repeat itself , it does rhyme very well ! Who could have told me that the Dow Jones could rally up to nearly 11.000 points into 2010 (Click Here) if I didn't look back at History ? .... No one !!!!!
Conclusion : History matters ,and so does this chart that I am showing you right above !!! Those who are telling you that a new Secular Bull run has started never studied history !
Stay calm Kids, I'm not quiting technical analysis to become a prophet ! Sometimes guessing the stock market successfully tends to make you feel like a prophet since a lot of investors start to follow you religiously.... but that's no the point of my post ! As you can see on the chart below , the Dow Jones from from 1924 to 1958, it took roughly 30 years for the Dow to recapture it's peak of 1929 which was in other terms the peak of the second major industrial revolution ! The second industrial revolution started in 1880. The basis of that revolution was the discovery of petroleum,electricity and so forth. The hot sectors back then were the railroads , automobile and aviation . The revolution peaked in 1929 and ended with the CRASH ! There was too much overcapacity at that time, too much money was invested in companies that went bust after the crash.
The Internet and telecom revolution that took place recently courtesy of our friends in Silicon Valley in the early 1980's crashed in 2000 ! Again there was too much overcapacity in the telecom sector,too many IPO's that went bust and we find ourselves at the same point ten years after the 2000 peak as in the chart of the Dow Jones above !! Money is hard to find for new technology ventures and no new other sector is poised to carry on an new Revolution as of today ! It's kind of ironic to see that we have celebrated the 10 th anniversary of the Nasdaq 2000 bubble a few days ago and yet the chart suggests that another major top is close at hand !
I'll say that again .... it's the only time since October 2007 that we had QQQQ break to new highs while SMH is laging behind with a lower high (CLick Here), furthermore the sentiment reading in ISE Call/Put are similar to that of October 2007 (Click Here) ! The next chart below is simply a zoom in of the one above :
You can clearly tell that that the room for upside is a matter of a few points ! Whether we touch that line or go briefly above it is not going to make a huge difference since the next leg down in the next few months will be huge ! I'll say this for the last time as I said in March 2009 (Click Here) , the time has come to prepare yourselves mentally for a another major downleg ! I know it sounds odd and strange, trust me.. it sounded also very strange in March 2009 when I called for a major turning point ! I don't really know which day exactly this thing is going to turn south ... but the charts tell me that on a long term basis it's becoming imminent ! Get ready for TYP(Triple short QQQQ),QID(Double short QID),PSQ (Short QQQQ) ... these are going to be the next winners of this next Nadsdaq downleg ! For those who have QQQQ's TYH or QLD .. do me a favor , get the hell OUT !
Do you know why we will not fail and will prevail in the end ??? Because we are on a "Mission from God" ;)
