Agoracom Blog

The Case For An 11,500 Dow – And Going Long On Gold

Posted by AGORACOM at 10:01 PM on Sunday, October 11th, 2009

AGORACOM Chief Commentator, Peter Grandich, believes we are in a secular bear market – but doesn’t believe it will resume until the Dow gets to at least 10,500.

My friend and Top 10 Financial Blogger Barry Ritholtz also believes we are in a secular bear market but sees the current rallying continuing until as high as 11,500.  In a must read post, he discusses the key factors that have been contributing to, and may continue adding to, the ongoing rally.  More than just lip service, I’ve provided 2 of his great data pieces to look atbelow .

At the same point, it should also be pointed out that both are bullish on gold.  Peter’s position is no secret – but Barry’s confirmation lends significant further support to gold bulls.  Specifically, Barry stated:

As I mentioned in an article this summer, you can look for a close of GLD over $100
and spot Gold over 1032 highs to get long or add to your position (Ideally,a close over 1050).

As we know, Gold smashed through both $1,032 and $1,050.

1]  Composite Of 29 Secular Bear Markets

I love this data because it is a compilation of 29 secular bear markets, as opposed to those that try and simply compare today’s markets to the Crash of 1929 – 1932.  Barry’s notes in the graph make his point very clear. “X” marks the spot that we are currently at:  (click on it to see a larger version if necessary):

2]  11,500 As The Typical Recessionary Sell Off Point

Barry demonstrates that 11,500 was the level we should have reached for a typical recessionary sell off – and that the next 5,000 points was the “end of the world” panic sell-off.  As such, we should get back to 11, 500 before real resistance starts to settle in.  Again, click on the chart for a larger image:

OK, then.  See you all at 11,500.


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