With the Dow Jones currently at 9,000 points, Francis Newton (a Murrey Math high tech trader featured on the Gerry V radio show in New Orleans) suggests the Dow will drop to 6250 by April or May of 2009. I haven’t heard any forecasters throw out specific numbers like this so it caught my attention. These forecasters expect a small rally through March and then a fast drop. So why 6250 and how does she come up with this number?
Her reasoning on the swing of the Dow is based on the Murrey Math Line. Francis says if the Dow drops below 8437 (within the first quarter of 2009) – then it will definitely continue dropping to 7812. If the market has enough momentum to move 1/8 from the midline – it will continue moving until a 3/8 move is achieved. Sound crazy? If the market drops below 8437 you’d better cash out… well that’s what she says.
The Dow is expected to rise in the beginning of the year and will appear headed for 10,000 (as high as it can climb at this time). The Dow has the “opportunity to go up, but the obligation to go down.” The brief rise in the stock market is due to a rebound from the severe drop it took in the last six months, bounced back with the recent influx of capital by the Federal Reserve.
Why does the Dow have an obligation to drop?
Due to the rough economic news constantly being delivered over the airwaves: consumer confidence is weaker, investors are nervous, folks are getting out of the market, buying power is down, and credit is tighter. All of this uncertainty in the market makes it all too easy for the market to fall again and perform what traders call the “dead cat dance”.
Unemployment numbers are rising and unfortunately we don’t receive those numbers until after the quarter has already passed. Across the nation stores are closing and workers are being laid off – much more than what the spoiled American, whose economy has been artificially inflated for over a decade, is used to witnessing.
An introduction to Murrey Math Trading
Every activity in creation requires three fundamental elements: Space, Matter and Time.
Where every repeated activity creates a pattern or rhythm. Seasons, celestial movement, tides, growth cycles, etc. (what goes up must come down). Recording the repeated activity draws a picture of the rhythm. The fundamental rhythms in creation are the same. The math is the same, the picture is the same, the result is the same: predictable change. By knowing the TIME of a cycle we can consistently anticipate the likely future direction of the rhythm by knowing where we are NOW in the cycle. Half moon to full moon etc.
The Murrey Math Trading System is based on the precise measurements of these universal cycles.
In order to understand how stock market cycles are created there is one thing we must know. A few legal insiders, trade in such large volume that they almost single handedly determine the direction of the market. They in effect own the goose. These insiders make massive amounts of money by constantly changing directions as soon as enough people follow their previous move! These traders are the pied piper of Wall Street. Their functional control enables these legal insiders to make millions from small percentage profits (from 2% to 10%), EVERYTIME they change directions.
This constant flow of huge profits from modest percentages in BOTH directions enables the truth to be camouflaged through official explanations of the market Up and Down. The noise of the market place serves as a verbal smoke screen that hides the real profit taking activity.
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