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Sandy Jadeja: Dow could plunge to 14,800
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Loading...It’s already been a big year for the Dow industrials, which have stretched a near-decade-long bull market to historic heights.
But if the technical stars collide, as one chartist predicts, the blue-chip gauge could soon plunge by more than 6,000 points to 14,800. That’s nearly 30% lower, based on Friday’s close.
Sandy Jadeja, chief market strategist at Master Trading Strategies, claims several predicted stock market crashes to his name — all of them called days, or even weeks, in advance.
And he’s extremely concerned about what this year could bring for investors. “The timeline is rapidly approaching” for the next potential Dow meltdown, said Jadeja. Timelines are at the heart of his predictions, which he bases on repeating cycles in the market that are connected to specific times.
“People need to look for three things,” Jadeja told MarketWatch in a late-January interview and follow-up conversations. “Price, pattern, and ... time. You can get the price pattern wrong, but if you get in at the right time, the other two don’t matter.”
He sees 2017 as littered with pitfalls for the Dow (^DJI) . Below is his so-called “timelines” chart of the stock index, defined by green horizontal lines. He’s currently on the lookout for the benchmark to approach that upper green line, which represents a range of 21,800 to 22,000.
“Don’t just go short,” he said. “ That’s where the public gets it all wrong. You have to wait for a break of the low of that weekly bar, and put a stop above the high.”
And here’s the crux of Jadeja’s concerns: If the rally inspired by last year’s presidential election continues, the Dow industrials could hit that 22,000 level — but if it fails, the pullback could be steep, or even steeper, based on history.
One level down would take the DJIA to 18,600, while moving two full levels lower would bring it to the aforementioned 14,800 level.
There’s just one more reason why Jadeja is so uneasy about this year, and into 2018. Stocks are in the midst of a seven-year cycle that only comes around every 84 years, according to the chartist. The current cycle stretches back to 2011 and ends in 2018 — and that’s why he’s more convinced than ever that stocks could be in for a bumpy ride.
MarketWatch
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