On July 29, 2020 I posted that the DJIA would reach 23,200 before or by August 19, 2020 at the latest. Why did I believe this to be true?
Note: Before we dive into the post, know that I'm writing this post on July 29, 2020 - the same day of the original post. The post is a scheduled one and won't publish until after the market close of August 19, 2020. My intention is not to change / edit this post after today unless I forget to mention something important or need to clarify some thought. Should I do so, I will append an update at the end of this post with the date of the update.
OK, enough of that. What led me to believe that the DJIA would reach 23,200 on or before August 19, 2020?
- Cycles / Levels: First off, within the context of cycles and levels of the Dow Jones Industrial Average, I believe the price is trending lower. I posted about this in DJIA: The In Between:
One of things to note is that there is a gap of 250 in between 26,713 and 26,963. The other thing you may have noticed is that each of the levels reduces (sums to) a Modulo 9 number. For instance, 28,963...
2+8+9+6+3 = 28
2+8 = 10
10 (drop the zero) = 1
The cynical might view this as some kind of numerology. It is not. In fact, utilizing Modulo 9 numbers is central to my method of predicting future prices along with powers and imaginary numbers.
There is real and psychological resistance near the 27,000 level.
- Square of Time and Price: Another reason I believed that the DJIA would reach 23,200 on or before August 19, 2020 was because of an approximation of the square between time and price. It's not really a true square of time and price. What I looked at leans heavily on an understanding about where the DJIA is within the cycle (trending lower).
The basic idea here was to take the numbered days of the year - January 1, 2020 equals day 1. Day 366 equals December 31, 2020 since this year was a Leap Year and February had 29 days instead of 28 days. Each numbered (1-366) day was multiplied by 10, 100 and 1000. Those numbers could be used to line up with DJIA price levels on certain days of the year. 23,200 resulted from day 232 (8-19-2020) x 100 = 23,200. That effectively created a square of day 232 or 23,200 (232 x100) and the DJIA price level of 23,200.
A further supporting point behind this was that July 29, 2020 was day 211. 21,100 = 211 x 100. If we take a level of around 26,560 (the trading day of July 29, 2020 isn't yet over as this is being written) then we can divide 26,560 / 21,100 = 1.25 (rounded down). If we are trying to square time and price then we want to arrive at the number one where the price level is equivalent with the day number. So for 1.25 I assumed that each .01 drop was equal to one day. To drop .25 was equal to 25 days. Advancing 25 days from July 29, 2020 resulted in August 19, 2020 (day 232 ==> 232 x 100 = 23,320).
- Spreadsheet Calculations: I keep a spreadsheet which is based on my idea that numbers act as a programming language. This spreadsheet allows me to see when prices are about to turn and also does calculations that point to important dates where the trend tends to change. One of those dates on my spreadsheet just so happened to be August 19, 2020. While some may believe in random walks and coincidence, the longer I have studied numbers the less I believe that anything is truly random or coincidental. I believe that numbers act in an equivalent matter to a programming language. Whether true in actual fact or not they are, effectively, what programs everything. So, when my spreadsheet calculates August 19, 2020 as an important date and it also shows up in another set of calculations I take that seriously and don't just look at it as a random curiosity.
Essentially, the above represented my thinking on why the DJIA would reach 23,200 by August 19, 2020. As a side note, I maintain some regular intervals within my spreadsheet that also tend to indicate when prices have reached interim peaks or lows. An interim peak at 26,625.46 was noted on July 27, 2020. Because this is an interim type of high, it's duration could be just a few days or less. However, when combined with the general downward trend in the cycle, the real and psychological resistance near the 27,000 level, and the gap between 26,713 and 26,963 as outlined in DJIA: The In Between, these all point to a DJIA that has run into resistance and has been making a series of lower highs. None of these things supports the idea of a DJIA moving to 30K or above. To the contrary, the price action has generally been fairly sluggish on the Dow.
Now all I can do is wait and see what happens. Whether I prove to be right or wrong, rest assured, the financial media will have some single reason they focus on for why the DJIA moved the way it did. In something as complex as stock markets, I simply don't believe anyone can point to a single reason for anything happening the vast majority of the time. Instead, I believe that numbers as a programming language give us the ability to understand when markets will move and which direction they are headed.
Update 8-18-20
Tomorrow 8-19-20 is the deadline for this prediction. Today, 8-18-20, the market closed at 27,778.10 which is above the 26,963 to 26,713 gap posted in the blog post above.
It is as close to nearly certain as possible that this blog post will be wrong. I would never say 100%, but it's close.
At this point, it appears that I am again too early. This is pretty typical of me. I tend to be very early. If I have to re-assess (and I do), then my evaluation would be that the DJIA is nearing an interim peak with tomorrow being a potential peak. These sometimes happen within a day or two afterwards.
The next two days I have on my radar are September 23rd and September 29th. The 23rd is something new I'm trying so I am not as confident that this will represent an important date or turn date. September 29th is more likely to be an interim turn date.
Given that the 29th is an interim turn date I would expect we go generally lower on the DJIA from tomorrow or soon after and continue mostly down through September.
The fact that the DJIA has not been able to break 30K gives me confidence that the resistance at that level remains pretty strong and the market needs to shake out the bulls once again (at least) before it will be able to build up enough energy to break that level and continue higher on a sustainable basis.
In summary, my prediction was way, way off. I did not anticipate the ability of the market to remain more or less in a trading range despite the economic blow dealt by the lockdowns. Cyclically, I believe we're getting close to topping. From a narrative perspective, in the midst of the 2020 presidential election, the more interesting narrative would be to have the stock market move down into the election. Interesting narrative often turns out to be the best way to forecast what will come next.
One last brief note - August 26th, after the close, I will be able to project the next move for the DJIA more effectively.
Update 8-24-20
I was obviously way too early to the party on this to say the least. However, I would like to add that I believe that we're setting up for the 26th of August to be a potential turn lower for the DJIA - if we're ever to see such a thing again. I have been riding a short horse until the poor thing is half dead. While the Dow Jones has managed to levitate despite the damage wrought be the virus shutdowns, I still think that the market requires at least one more run lower before it can gather enough steam to challenge 30K and possibly much higher.
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