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Market Forecast: Outlook for the Dow

Posted November 14, 2007

“I think we’ve seen the last of lifetime highs for a while on the Dow… and I mean for the next few years.” — Ann Sosnowski

by Ann Sosnowski, Today’sFinancialNews.com

Wednesday, November 14, 2007

Baltimore — (TFN): Given the ups and downs in the American equity markets since October, it is becoming increasingly difficult to obrtain a clear, let alone bullish!, picture of where the market is going to finish the year.

Let me give you my best guess for the short and medium-short term.

For November 30, I see a possibility of more downside than upside. My bet is another substantial drop in the Dow that will get the index down to 11,939 at the end of November.

By December 31, I think we’ll see a little bit more strength, courtesy of a mini Santa Claus rally — even though this retail season is going to pale in comparison to the last few years of growth. If we see 11,939 by the end of November, I’d say 13,084 as an end-of-year rally high. But nothing more. That would still end the year up on the Dow by 6.32%.

I hate to be a naysayer but I think we’ve seen the last of lifetime highs for a while on the Dow… and I mean for the next few years. The previous long-term rally on the Dow lasted four years, from January 1996 to January 2000, gained 131% and took us to highs of 11,750.

The current rally started in November 2003, and four years later it’s November 2007 and we’ve seen an advancement of 47%. It’s the exact time that history, if we use it as a guide, especially with technical analysis, says we should give up on the large caps.

There’s going to be a lot of downside in the next few years: The 200-day MA is almost finished rising and looks to be rounding over, which is the first indication of a larger correction after such a long run up.

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Posted by Ann Sosnowski · Filed Under US Stocks and Markets 

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