If you take a very long term view of the dow, back to 1970, then the recent down moves so far are just blips. The median line, that mathematical centre of gravity, says that the long term price target this month is 18430. It also says that 87 and 00 were blowoffs. Further it says that the correction now is in fact just resistance under the long term dynamic line established by the market in the course of its history from 1970, and if the median line is true then a break of the old highs should lead to 18430 or higher as time progresses (its an upward sloping line). Of course, hyperinflation might take the market to extraordinary highs in very short time because inflation umm 'inflates' all asset values. This is the zimbabwe scenario. Good for us who have stocks, fixed rate mortgages and adjustable incomes maybe, maybe not good for banks as rates would be very high, so probably not a favoured scenario for the fed. This scenario is also of course consistent with a possible gold price rally to extraordinary highs as people seek to preserve real value as the value of the currency declines. The recent rally in gold suggests there are a large number of people anticipating this eventuality perhaps on a global scale, perhaps just in usa.
I know there are prophets out there who have been suggesting the total meltdown scenario for some time, but this is a scenario I've come to from my own analysis. It is just one scenario but curious that it should be suggested by mathematical analysis.
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- huntley says
huntley says, page-10
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