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Dow Average May Be Poised to Fall to 7,000: Chart of the Day
By David Wilson
Oct. 10 (Bloomberg) -- The Dow Jones Industrial Average would have to fall about 18 percent more to reach its ``trend line'' since August 1982, when the 1980s bull market started, according to Peter Boockvar, an equity strategist at Miller Tabak & Co. in New York.
As the CHART OF THE DAY shows, the average is closer to the reading indicated by the trend line than it was in October 2002, when the last bear market hit bottom.
Yesterday's close of 8,579.19 was about 23 percent higher than the level indicated by its past performance -- about 7,000, Boockvar wrote in an e-mail today. The Dow average's earlier low was about 35 percent above the trend line.
The Nasdaq Composite Index fell to its post-August 1982 line ``almost to the penny'' after the 1990s Internet bubble burst, he wrote. The index plummeted 78 percent between March 2000 and October 2002, when it reached a six-year low.
Since Sept. 29, the Dow industrials have fallen 23 percent. The retreat started with a 777.68-point plunge, the biggest one- day drop in history.
The Standard & Poor's 500 Index would have to lose only about 6.5 percent more to hit its trend line, according to Boockvar. The reading suggested by the index's swings in the last 26 years is 850. Yesterday's close was 909.92.
Stocks may hit bottom before the benchmarks drop to these levels, Boockvar wrote. ``We certainly don't need to get there in order to create a bottom,'' the e-mail said.
To contact the reporter on this story: David Wilson in New York at [email protected]
Last Updated: October 10, 2008 09:24 EDT
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By David Wilson
Oct. 10 (Bloomberg) -- The Dow Jones Industrial Average would have to fall about 18 percent more to reach its ``trend line'' since August 1982, when the 1980s bull market started, according to Peter Boockvar, an equity strategist at Miller Tabak & Co. in New York.
As the CHART OF THE DAY shows, the average is closer to the reading indicated by the trend line than it was in October 2002, when the last bear market hit bottom.
Yesterday's close of 8,579.19 was about 23 percent higher than the level indicated by its past performance -- about 7,000, Boockvar wrote in an e-mail today. The Dow average's earlier low was about 35 percent above the trend line.
The Nasdaq Composite Index fell to its post-August 1982 line ``almost to the penny'' after the 1990s Internet bubble burst, he wrote. The index plummeted 78 percent between March 2000 and October 2002, when it reached a six-year low.
Since Sept. 29, the Dow industrials have fallen 23 percent. The retreat started with a 777.68-point plunge, the biggest one- day drop in history.
The Standard & Poor's 500 Index would have to lose only about 6.5 percent more to hit its trend line, according to Boockvar. The reading suggested by the index's swings in the last 26 years is 850. Yesterday's close was 909.92.
Stocks may hit bottom before the benchmarks drop to these levels, Boockvar wrote. ``We certainly don't need to get there in order to create a bottom,'' the e-mail said.
To contact the reporter on this story: David Wilson in New York at [email protected]
Last Updated: October 10, 2008 09:24 EDT
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