In mid-November with the Dow sitting around 12,600, I posted a study demonstrating why the Dow was poised to move to 13,500 by year end. The basis of this study was the movement of the Dow in and around its primary trajectory, pictured here.
During the final summary of the Dow 13,500 study, I noted the following:
If this study should continue to provide the road map to the current market based on the relation to the trajectory, we know the following:
1. There will be very little downside volatility in the months and years ahead.
2. There will be very little upside volatility in the months and years ahead.
3. The market will be in a very slow and arduous bull market in the years ahead that feels like it is prone to collapse at any moment. Sound familiar? We’re already seeing that honey.
4. Declines of any more than 5% should be bought hand over fist. We are currently at a 7.5% decline from the recent peak.
I believe there is a very strong possibility that the attachment of the market to this trajectory continues throughout 2013. If so, it gives investors an extremely accurate road map every step of the way. Here is an illustration: