Dow plunged below 12,000 – Wall Street believes its oil price but quantitative models manifest recession
Fred Day
Nov. 3, 2006

Dow was having serious difficulty in sustaining above 12,000. When stock prices are adjusted to gold process Dow is actually below 7,000. Even in current dollar pricing the Dow could not sustain the 12,000 levels. The momentum indicators say the Dow is in a serious bear market.

But before all hopes are dashed, the probability models forecast there are more than 82% chance that Dow will attempt to go above the 12,000 level. With good fundamentals, the long term tops are difficult to establish. With bad fundamentals as it is now, it is even harder. The reason is that the smart money is not in the market. Those who are waiting for Dow to reach 15,000 have little idea what is going on in the economy. The disconnect between main street and wall street is so big that the hedge fund manager have no idea about the risks to the stock market.

There are some risks for the bears too. The dumb money is plenty and that can keep pushing the market higher till one or two big players are left.

Remember what happened to silver market in twenty five or years back. Remember the Hunt brothers!

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