A Lighthearted Look at the Technical Charts

September 24, 2010

From: xxxxxxx
To: yyyyyyy
Subject: DJI Head and Shoulder

I took a look at the DJI chart and OK, there is one there. You really have to bend stuff to make one on the S&P. So here is my confident(!) reading of the economic tea leaves for the next few years:-

We muddle along until approximately March 2012, with inflation becoming the driver for stock prices. So real returns are low. Around this time frame, the S&P peaks around 1350, and the DJI reaches the edge of its right shoulder. One or more major Dow components winds up in difficulties. Obama continues as president, and so by the end of the year (or by April of 2013) the Dow component declares bankruptcy. Things happen too fast for the Dow board to toss that component off of the Dow average, and the Dow ends that year around 6000. Both the S&P and the Dow continue to drop with the Dow reaching bottom at 4000 and the S&P 800 around April 2014. The Dow snaps back up to 9000 by 2015.

Oh, also, MSFT gets whacked by some accounting scandal, ORCL buys HP, and Larry Ellison is recognized as king of a minor country by the UN. Meg Whitman, frustrated, unleashes a nuclear bomb on Sacramento, and California breaks away from the Union. Whether Meg and Larry become related is an open area of 'future' research........