Friday, November 21, 2008 @ 2:37 PM

The Doomsters: Louise Yamada

From Daily Digest (Everyone) | 4 Comments | Print  

CNBC Fast Money has a survey at the end of When Will The Selling End? that asks, “Are the doomsayers correct and will the Dow fall to a once unthinkable level like 6,000?”

I’ve seen so many Dow 6,000 (and worse) segments on TV over the last two days that it’s time to make a doomsayer’s hall of fame. Let’s start with Louise Yamada who we mentioned a couple of days ago:

Chartology: When Will The Selling End?
The previous five years were great for investors living in a dream world, but with this market experiencing the fourth worst decline in the last 80 years the real question is, is the nightmare now beginning?

A Nightmare on Wall Street?

Unfortunately, the short answer is yes, according to technical analyst Louise Yamada. She says, “I think the charts have been forewarning us that the markets are deteriorating.”

“The 2002 lows are very vulnerable and chances are good they are going to be broken,” she tells the traders, grimly.

If you look at the chart below you see a massive double top with a critical 10 year support at 2002, she says. “And we’re breaking that support.”

In other words, not only has the S&P fallen below its 2002 lows, but it will likely continue lower from there.

Sound far-fetched? Maybe but Yamada is one of the most celebrated technicians on the Street, winning the award for best chart analyst 4 years in a row from 2001 to 2004.

She has a 600 target on the S&P 500 and a 6,000 target for the Dow. That’s where she thinks we’re heading.

There’s more: Yamada Sees U.S. in ‘Structural Bear Market’ for Years [WATCH VIDEO]. If you’d rather use Windows Media Player, CLICK HERE.

We’ll continue this series throughout the weekend.

Questions and Comments

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  1. Dan on November 21st, 2008 4:11 PM

    6000? phooey. we’re back over 8000, the water’s fine, come on in. 14000 here we come.

    (cue the shark music. we’re going to need a bigger boat)

  2. Eric D. on November 21st, 2008 10:12 PM

    Peter Schiff not only has a new book, but that it’s a “Little book of Big Profits” series.

    I thought Yamada’s target was 6000-7800, What is that a 23%-30% Range? If throwing Darts that is like saying “I win if I hit the wall with the dartboard”

  3. Teresa Lo on November 22nd, 2008 12:23 AM

    This whole episode reminds me of the way gold used to trade. Every time it went up for a while and clients formerly too afraid to trade would call to buy, I knew it would be close to a tradeable top by watching CNBC on a Thursday or a Friday afternoon.

    Someone would interview John Murphy, and it would proceed like gold, this, that, this, that, blah blah blah. The interviewer would then ask, “How much higher is it going to go?”

    After the commercial break, Murphy would come and say, “It will go up to such and such” and of course, it was the kiss of death. Gap up on Monday morning and ker-pow to Ma and Pa Home Gamer.

    So in a way, the latest two Yamada interviews are the bookends where they are dragging out the most bearish analyst to ask, “How much lower can it go?” and voila, the PPT came out at 3PM on a Friday afternoon to give it to them up the whazoo.

    Here’s a good article on sentiment: “The data showed a net inflow of $37.1 billion into money market mutual funds, the second highest since the firm started tracking these funds on a weekly basis in the last three years or so. The highest net inflow was Oct. 15 when investors parked $44.4 billion. It was during this latest reporting period the American benchmark Standard & Poor’s 500 stock index fell 5.36 percent. Money market funds have taken in a net $314 billion this year, bringing the total tracked by EPFR to $2.657 trillion. Last year the sector took in a net $198 billion.”

  4. Robert on November 22nd, 2008 2:00 AM

    I saw her on Fast Money. She said it was headed to 600 and if that didn’t hold….400!?!? 50 percent Louise? I have noticed a lot of public people starting to banter a 6 “handle” around. They say it almost blithely. I hope they’re all short, lol.

 

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