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Dow Closing in on Major Price Peak Above 12,000


Do we have any doubt that the DJIA is going to make a run at 12,000 before the end of this week? With the enclosed chart, I try to make two points: 1) that since the 2002 low in Oct. of that year, the DJIA has made a significant low every October (Sept. 29th in 2003) since then, EXCEPT 2006, which certainly looks like it is a candidate for an unusual Oct. HIGH. This type of "cycle inversion" usually coin- cides with a major price peak, a ushers-in a down cycle of commensurate importance and magnitude. In English, that means an Oct. '05 low to Oct. '06 cycle high, likely will be followed by an Oct. '07 cycle low, which points to some rough going after the approaching peak has been established; and 2) that various measurements off of the Oct. 2002 low, as well as off of the Oct. 2004 low argue for a target window of 11,885 to 12,450. While that is a 4.5% "window," it should be satisfied quickly, and then vanish, which will leave precious little time for investors to hedge, or otherwise protect against a major downside reversal.

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