Citi Near Term Stock Forecast: 9300 In The DJIA; 985 In The S&P; Sees Chart Analogs To Pre-World War Periods

Tyler Durden's picture

Earlier today we presented one of the 12 forecasts by Citi's FX Technical group which saw gold reversing recent drops, and soaring to $2400 by H2 2012 and far higher later on. Naturally, one argument is that this is simply Citi talking their books, and that one should be short when a bank is pitching a long. Of course, that is a valid interpretation. On the other hand, it is also possible that the recommendation is nothing less than a contextual recommendation of the what the big picture would look like if the bankers' grand plan falls into place. And the plan is simple, and has been discussed extensively before here: namely, to push the market to that critical triple digit threshold at which point Congress and the population (most certainly including the "99" which just happen to have 401(k) and other pension funds) will beg Bernanke to print. However, the traditional resistance has been the market discounting precisely this, and refusing to sell knowing that when the market drops, it will eventually rise: a traditional Catch 22. Which is why stocks in the US have lagged the correction in China and Europe for as long as they have - this has not been a decoupling as is widely misunderstood; what it has been is a delayed realization that Bernanke will not print until market discounting fails, and stocks flush. Then and only then will "salvation" come from Saint Ben. Which is actually precisely what Citi is preaching. In the next two charts, we see its recommendations for the Dow Jones Industrial Average and the S&P, as dropping to 9300 and upper 900s in the S&P, at which point the Fed will have no choice but to intervene. It is in this context that the lift off of gold will take place, and where the previously stated targets of north of $2400 are quite feasible. Yet, ignoring the price of gold, it is Citi's ultimate conclusion that is most disturbing: the bank finds eerie similarities in the current stock market formation with previous charts, both of which eventually led to World Wars...

From Citi:

We still expect 960-1,015 in the S&P 500 and 9200-9400 in the DJIA to be seen in the coming months

  • The 1966-1978 compared to 2000-2012 dynamic remains our number one choice of the 3 Equity overlays. The backdrop of an Equity market collapse (1973-1974); a surging Oil price (1973-1974); a sharp fall in economic activity and rise in unemployment (1973-1975) and a collapse in housing activity (1973-1975) all have a “strong resonance” with some of the dynamics we have seen in the 2007-20 09 period. In addition the weaker USD and very easy Fed policy seen then also “resonate.”
  • While we have already had a high to low fall in the DJIA of 19% off the May 2011 peak this overlay suggests that the ultimate move may be closer to 28% “peak to trough” and take us close to 9 300 in the first half of 2012 If so then a sub 1,000 move on the S&P 500 would also be likely (Possibly towards 960). If this is in fact the best overlay it would suggest that the 9,000 area could be the platform for an eventual bull market again within about 5 years (After a lot of choppy price action first- i.e. A trading market).

And it gets worse:

These other 2 overlays paint a less favourable picture overall.

  • Choice 2: Has less history than the other 2 (4 years versus 11 or so) but fits very well in terms of the timing and pattern of the collapse and recovery. Price action incorporates the banking crisis of 1906-1907 and its aftermath.
  • Choice 3: Compares the collapse of the technology bubble with the 1929-1932 Industrial index collapse. The 1938-1939 recovery came with the abandonment of the then version of mark to market accounting and the establishment of the uptick rule.

And the scariest bit:

Apart from price action some reasons not to like these are. 1.
They both suggest that the 2009 lows would be re-tested by 2014-2016 2.
They both preceded / led into World Wars 1 and 2 respectively.

So, charting our way right into war?

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moskov's picture

Just wanting to say Bitchz....that's all

Alex Kintner's picture

Look out below...

BREAKING!!! The Obama Chia Pet is now available.
https://www.americanchia.com/?rtag=chiaobama&

redpill's picture

Technical gobbeldygook.  Might as well call Ms. Chloe.

The key flaw with technical analysis is that it largely ignores the fact that things happen for a reason, and not just because they have happened similarly before.  You can find numerous historical charts that appear to correlate with recent trends, but making the leap to thinking it is therefore predictive requires a suspension of disbelief that someone who is attempting to preserve their capital in the modern wasteland of investing has no business taking part in.

SGS's picture

So that puts Citi (C) at about .21 cents?

s2man's picture

Yup.  Look!  I found two fractals which are similar.  This implies...

caerus's picture

speaking of fractals...

those who wish to indulge the lucky lucky chicken bone technical trading community should observe the set up in bidu...2011 has resulted it what may be yet another ubiquitous h&s formation, with the oct right shoulder of the 2011 right shoulder flirting with completion... short term support is at 105ish imo...short interest is relatively small atm...

macholatte's picture

Do the Citi guys have any kind of track record that gives them any credibility?

Are they just another pump-n-dump outfit?

What makes them better than the Goldman crowd or anybody else?

Here's my prediction, and you can bet your life savings on this:

The market is going to go up, it might go down first, but it will eventually go up. I don't know by exactly how much or when this will happen but I'm absolutely positively sure it will be at some time in the future.

OK?

 

Mactheknife's picture

>What makes them better than the Goldman crowd or anybody else?

Because when the global banking cartel who own C, GS, JPM, the Fed, the Bank of England and many more, runs out of ways to fleece the world, they figure out ways to buy the right politicans to start wars and then they fund both sides. You can take this as a threat from them. And don't think for one second they can't deliver.

DeadFred's picture

A Citi forcast like this is worrisome for bears. We're starting to get the typical MSM scare tactics that always precedes a bottom. Next we'll get Mohamed El-Erian spouting gloom and doom. It's not that what their saying is off it's when they get air time and front page space you know the down turn is about over. They do this so lots of people will be selling as the insiders buy into a bottom they know is coming. One Citi post is not enough but if Goldman, Cramer and El Erian get face time cut your short positions. I will.

Mikehy's picture

I get why institutions would try to get people worried near a bottom, but not following why the media would join them. As annoying as the media can be it takes quite a jump to imagine that the media has a vested interest in scaring money into banking hands

Mactheknife's picture

Well....who do you suppose owns the main stream media?

Mikehy's picture

And all of the employees in the media? And somehow all those employees have managed not to let the cat out of the bag all these years? I am all for conspiracies, but at some point there has to be some limit on the size of the "them"

bank guy in Brussels's picture

Media employees have to please their bosses, or get fired for some made-up fictitious reason.

Only a few companies control most Anglo media. They don't even have to speak the rules; the submissive employees 'know' what they must do.

There are a million unemployed kids dreaming of media jobs ready to kiss arse and replace them, if any current big media employees do not behave.

And then once the media employee is unemployed, on the margin, and he tries to 'blow the whistle' ... what is he or she? ... he or she is now a blogger, one that you probably haven't heard about, one more voice mostly overwhelmed by the major media hurricane.

scratch_en_sniff's picture

Well thats right, things do happen for a reason, well spotted, but when it comes to markets there is always a certain dynamic in which that reason or chain of events unfolds, and its all reduced to a simple series of prices on the charts for easy access, or indeed some biased, easily followed narrative in a history book. As a thought experiment; say you had absolutely no idea of history, only an ability to read charts, and one day decided you wanted to learn some actual history, but to save time you only wanted to learn about key events in history. Well you could look at a chart for any particular year and identify extreme pricing events, or where the market seems to be exhibiting abnormal behaviour... and surely enough if you went to the library and found some material for the corresponding year or era, you would certainly find defining moments.

The charts just show you how it all unfolded in the market, or how the market expressed itself at the time, and if the market is always right for the most part, then why not look at what it was telling people at another point in time?

But the key flaw with your swagger, is that you think the people who look into the market past actually proclaim certainty over our future, when really, they are for the most part aware that the actual dynamic of reality is a tough thing to capture, through literature or charts, and are really just drawing our attention to key points. In a nutshell, like a lot of psychopaths that post here, you take the brave step of assuming that people are thick. You have seized this as just another opportunity for you to pontificate with your correlation is not causation brain farts, haven’t you? “Look at me, I have realised that i exist on a bleak random planet, aren’t i fucking great!“

Get over it, there is not one serious technical analyst in the world who thinks they have hard proof that something is going to happen. Out of sympathy for them I would recommend they put a disclaimer on they’re work “Please note, we are not trying to predict the future and are quite aware, being educated adults, of the whole correlation is not causation phenomenon, so be a good boy and don’t piss your pants”.

RobD's picture

LOL Cha...Cha....Chea! Love the "Yes we can" on the side.

Matt's picture

Chia Obama: "Representing Peace, Hope and Prosperity" Wow, really?

Spastica Rex's picture

It's covered in green shoots.

s2man's picture

That was good, Rex. 

+1 script is broken for me about 25% of the time, lately. :-S

my puppy for prez's picture

But wait....there's more!

Get TWO chiaobamas for the price of one, and we'll throw in a thermonuclear war ABSOLUTELY FREE!

blu's picture

Onion parody maybe? No?

Well then -- what the actual fuck.

HedgeAccordingly's picture

it is all about the chicks. and dow 6666 http://hedge.ly/gFWVSm

vast-dom's picture

Too kind! SP = 850! Anything higher is pure market manipulation disregard for funduhmentals and structurals and laws of physics and good taste.

PS silver at 53-58; oil at 112-128. Everything else is pure casino rigging. 

The Big Ching-aso's picture

 

 

Another world war because of greed, corruption, and stupidity.  Swell.   What the hell happens when we run out of this world to war with? 

Aliens must think this is one of the top 10 scariest places in the universe to visit.

falak pema's picture

-30% is that awl....? gee thats nada...I thought this would fall to S&p = 500.

r101958's picture

Problem with these comparisons is that the underlying fundamentals are completely different now. The current situation is much worse. Government is 15 t in debt, Fed has no more ammo, the people are broke and/or over-leveraged and resources are peaking or over the peak. This is the problem when just comparing charts...not much else is considered.

redpill's picture

It also ignores the reality that most stock trading is done autonomously by high frequency trading algorithms and goosed on by global "coordinated actions" of central bankers on a day to day basis.  There is nothing real about this market, it has become inherently unpredictable.

my puppy for prez's picture

The FED may be outta ammo...but Americans are all stocked up.  Record gun sales this holiday season.

"What do you want for Christmas, little girl?"

"Why, Santa, all I want for Christmas is a pink Bushmaster ACR.  Please, Santa?  I've been very good this year..."

 

redpill's picture

Actually that last downward leg sort of looks like the Citigroup stock price over the last 5 years.

blu's picture

It will be S&P at 500 in today's dollar valuation -- but dollar devaluation will have it at 5,000 by then.

Bullish!!1! You're selling physical PM and going long now, right? Good man!

ghostfaceinvestah's picture

What is Carter Worth predicting these days?

TruthInSunshine's picture

mm hmm

 

 

They may be right

They may be wrong

You may be right

I may be sorry

But just don't let confirmation bias burn your ass...

 

I twisted Billy Joel lyrics very badly, and I'm not even saying I agree or disagree (how could I even know?), but since when is Citi an authority of prognosticative reliability on anything, whether PM prices, equity index levels, or anything else in or of the future, for that matter?

Is the same Citi that had such talented chartists/analysts that it is ward of the state (...errr, nation)?

 

My non-technical, non-chart derived, ass meter says that the economy now officially sucks, it will get worse as deleveraging continues for YEARS (which in and of itself, will add more velocity to the deleveraging already under way), that The Bernank will be soon unveiled for the false wizard and charlatan that he is, and everyone should buckle up.

kengland's picture

I agree completly. To take it to another level, why is this nonesense brought to ZH for consumption when on any given day that ZH discredits everything coming out of shops like this? Inconsistant to say the least

Tyler Durden's picture

Just to make sure our pharma longs which sell anti-anxiety meds, don't miss on their top line

tmosley's picture

The joke's on you Tyler, we're all off our meds!

Rainman's picture

yeah, now we're all fukked up on Mountain Dew

TruthInSunshine's picture

Speaking of "pharma longs," there is a massive shortage of medications (mainly generic ones) in the United States as of now.

I am confident many of you already know of this.

Strange times.

my puppy for prez's picture

They're in the Siberian pharma-vault and or the FEMA camps

NotApplicable's picture

Oh, so... now I know why a Tyler told me recently it was med time.

I'm with tmosley though, no pills for me.

Speaking of meds, I do believe it's beer-thirty.

hasta la bye-bye!

Nobody For President's picture

To hell with pharma - Long distilleries!

TruthInSunshine's picture

I've found that one of the hardest things for me in life, generally speaking, is to remove emotion from how I view the world and to try and detach myself from how things should be (as in investing my emotions in the progress I see in rectifying wrongs and injustices).

I sometimes succeed, but more often than not fail, in doing so.

I'd love for real money (as in things having inherent value) to literally bring down an economic system built on Ponzinomics, where colored toilet paper passes as the object of desire based on proclamations of its 'full faith and credit' or other such nonsense, and for a real system not based on Ponzi schemes mostly derived from fractional reserve 'banking' practices to exist, whereby real and true talent and work are are rewarded (found frequently in free market systems, which bring maximum benefits to the largest % of the population). This would leave NO role for Goldman Sachs or JP Morgan, unless they reorganized completely and were weened off of the teat of the state/FedReserve.

Will it happen?

I dunno.

fonzanoon's picture

75% of the people on this site have the S&P at 900 by next week. 2014 is light years away.

JPM Hater001's picture

My puts expire Monday so sooner than later pleas.

TruthInSunshine's picture
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kill switch's picture

Roll out the red carpet to the cellar!!! Has anybody thought about how a DRONE LANDED IN IRAN WITHOUT A SCRATCH?? THREE POINT,,,NICE SETUP NEOCONS

iDealMeat's picture

Apparently all you have to do is sit outside with your laptop and wait for the "Found New Hardware Device" to pop up..

Double click on it.  And land it..

 

duh..

NotApplicable's picture

LOL

More likely they went outside after lunch and saw it sitting on the tarmac, where they all channeled Steve Martin and Dan Akroyd's old SNL skit, "What the hell is that?"

Tinfoil sites claim some Chinese gave Iranians access to their back-door. Spy vs. spy vs. spy, all with the same Fabian paymaster.

TruthInSunshine's picture

+1

Updates available, bitchez.