1. Dow Jones 13,252. Not All Clear Yet » The Politics of Debt November 28, 2007 @ 7:03 pm

    […] Friday I wrote that the Dow Jones was Ready for Next Leg Down. I said that “barring a surprise move from the Federal Reserve next week, the next meaningful […]

  2. An Exercise In Market Timing | The Politics of Debt December 9, 2007 @ 9:58 pm

    […] on November 23rd I said that I thought the Dow Jones was Ready for Next Leg Down. Of course, there was the need again to qualify the statements, because we were indeed so close to […]

  3. Emir December 27, 2015 @ 7:37 pm

    Hi! Where are you getting the inrofmation that the Federal Reserve Contract expires this December? That’s a Myth or do you have concrete inrofmation to substantiate this? If so can you supply it? Thank You

Dow Jones Ready for Next Leg Down

Finance, Thoughts Comments (3)

Two weeks ago, when the Dow had fallen about 1000 points, I said that the Dow Jones at 13,099 should see a rest. I expected at least two flat weeks and we had them within less than 1%. As I write this the Dow is at 12,930.24 (0.98% lower than the 13,099 I detected as a possible stop for the fall).

Barring a surprise move from the Federal Reserve next week, the next meaningful movement for the Dow should be below 12,5000 (about 4% down from here). The Federal Reserve will intervene to protect America’s economy in times of war.

As I mentioned in October 1st, I am expecting the Dow to double its price in dollars in the next 2 years. I also expect that to be an inflationary move, not sustainable and based on the feedback mechanism that feeds all inflationary human activities. Basically, a bubble. After that bubble, we should see real economic trouble.

Theoretically, as the value of the dollar tends to 0, the amount of dollars needed to sustain economic activity tends to infinite. At a given point in that process we will face the mathematical impossibility of having a large enough number of dollars.

The dollar should get a bigger hit. US companies should benefit in the short term and the gap between imports and exports should narrow. This will be touted as a “renaissance” of the American industry. This may be based on a model similar to that of the machiladoras in Mexico, where workers with minimal training ensemble products with parts manufactured somewhere else. Expect more American products with parts manufactured abroad (no matter how low the dollar falls, it is hard to beat 0 cost labor).

I am basing this predictions on mathematical models that predict most probable outcomes based on a series of simple rules that create complex patterns. This is not financial advise, only philosophical discovery. I am sharing my observations as I advance in the development of the system (after all, this is a blog).

Franklin @ November 23, 2007

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