bogie
04-06-2013, 16:28
There is speculation that we are reaching the peak of an "Elliott Wave", which is an economic model developed in the 1940s. It's pretty dry stuff, but you can read more about it here (http://en.wikipedia.org/wiki/Elliott_wave_principle). If you apply this model to the Dow Jones Average, we are basically at the peak of the current cycle. Here's a ghetto breakdown...
The model predicts that we will see three periods of growth, where the first two are followed by a short decline. After the third peak, there is a significant decline in market value. The model is also considers the market as a fractal, where the same behavior repeats itself on smaller and smaller scales. You'll see three minor upswings in each of the major upswings, and so on. See the following figure, which shows Elliot's model.
25423
The model predicts that market is due to decline after this current peak, and probably in a significant way. To demonstrate the model, I got the last 5 years of DJIA off of Google and 'roughly' plotted the model trend over the actual Dow data. The red line is my fudged fit, but I think it demonstrates the principle reasonably well. This model works for the S&P and NASDAQ indexes as well over the same time periods. It also works for the last upswing prior to the 2008 financial fiasco.
25421
There are a lot of stock forecasters that use this theory in developing the strategies for some of the large investment firms. You can find many articles about this online.
I'm not fear mongering here, and am not telling you to go and dump all you shares, but it's at least worth considering that the market may see a significant drop soon. Also, I'm only an amateur investor, but I like to stay informed with what the market is doing, and check on my investments at least weekly. I'll bet some of you finance guys know a lot about this stuff and thought we could discuss.
The model predicts that we will see three periods of growth, where the first two are followed by a short decline. After the third peak, there is a significant decline in market value. The model is also considers the market as a fractal, where the same behavior repeats itself on smaller and smaller scales. You'll see three minor upswings in each of the major upswings, and so on. See the following figure, which shows Elliot's model.
25423
The model predicts that market is due to decline after this current peak, and probably in a significant way. To demonstrate the model, I got the last 5 years of DJIA off of Google and 'roughly' plotted the model trend over the actual Dow data. The red line is my fudged fit, but I think it demonstrates the principle reasonably well. This model works for the S&P and NASDAQ indexes as well over the same time periods. It also works for the last upswing prior to the 2008 financial fiasco.
25421
There are a lot of stock forecasters that use this theory in developing the strategies for some of the large investment firms. You can find many articles about this online.
I'm not fear mongering here, and am not telling you to go and dump all you shares, but it's at least worth considering that the market may see a significant drop soon. Also, I'm only an amateur investor, but I like to stay informed with what the market is doing, and check on my investments at least weekly. I'll bet some of you finance guys know a lot about this stuff and thought we could discuss.