Wednesday, March 4, 2009
Forecast 2009: Charting StocksWednesday, March 4, 2009
2009 will be a year of complete destruction for the US economy. 5 Million will lose their jobs. The Dow Jones Industrial average will break below 6,000. Municipalities will fail. Insurers will fail. The unemployed and foreclosed American population will take to the streets and begin rioting. The Greatest Depression is upon us.
Sound far fetched? We welcome you to read our archive section from 2007. ChartingStocks.net issued warnings of the coming stock market collapse and successfully predicted the coming depression which is now at hand. At the time, our view was also “far fetched.”
January BarometerAnalysts like to give their full year forecasts in December before the year begins. It makes sense considering the amount of new years resolutions and the endless assortment of “Top 10? lists for the coming year that one tends to see at year end. From a practical standpoint, however, it makes must better sense to forecast the financial markets after the crucial month of January has past.
Historically, stock movements in the month of January has been an accurate predictor of the following eleven months. Technicians refer to this as the “January Barometer.” According to the Stock Trader’s Almanac, the January Barometer predicts the year’s direction with a 74% probability. To coin the old Wall Street saying - “As January goes, so goes the year.”
So how did January go? January 2009 was the worst January for stocks EVER. All of the major sectors finished the month down while the market (S&P 500 index) lost 11.3%. Traders and portfolio managers also use the barometer to sort through different industry groups. Generally speaking, if an industry group does well in January, it tends to do well the rest of the year and vise versa. Here’s the break down of January performance:
healthcare -0.04%utilities -1.48%tech -4.88%energy -7.94%staples -7.31%materials -11.92%discretionary -13.29%industrials -15.53%financials -27.01%
Every major group was down for the month. Healthcare and utilities held up the best which you would expect in a fearful market. These groups are defensive in nature. The US financial sector shed 27% in the month of January alone! Bottom line - The January barometer is predicting a year of carnage.
Great Depression Part DeuxAre we in a depression? In 2007, when we wrote about the coming stock market collapse and depression to follow, it seemed to be a very far fetched notion and was met with disbelief and even a few harassing emails. What a difference a day makes. Sure, the mainstream media won’t dare call it a depression but you must consider that they were denying that we were in recession until very recently. Let’s examine the state of the US economy.
Automobile Industry: The number of vehicles sold in the US has been decreasing at a gradual yet continuous rate since 1999, when nearly 8.7 million vehicles were sold in the US. The auto industry is in depression.
Full article here