Dow 20,000 is a Possibility in 2013
- Posted by Greg Harmon
- on May 8th, 2013
With the Dow Jones Industrial Average closing over the 15,000 mark for the first time ever, it begs the question, just how high can it go? This will not be a 200 page book on the subject using historical P/E ratios or other measures. A simple Harmonic pattern shows that a reasonable target is 16,810 and that 20,770 is within the realm of possiblility. Take a look.
The move off of the March 2009 low to the peak at 12,876 in May 2011 took 2 years and two months. Using a simple AB = CD pattern applied to the Monthly chart of the Dow ($DJIA, $DIA) gives initial target in December of 2013 to 16810, also a 2 year and 2 month run higher. But these patterns often extend by 127% or 161.8% of the initial leg. In that case the target could be as high as 18,540 or even 20,770 at year end. If you think that is crazy, then consider that the two peaks at that point could be part of a 3 Drives Pattern. This would give the corresponding targets in July 2016 of 19,854 on a straight AB=CD, 25,165 at a 127% extension and 33,400 at a 161.8% extension, assuming the same 20% pullback for 5 months as happened in May 2011 occurs following December 2013. One tool, one view.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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