Joe Granville Sees the Dow Falling to 8,000 This Year

By on January 24, 2012

Joseph Granville - Granville Market LetterI didn’t know this guy was still alive, but Bloomberg found him willing to give yet another stock market prognostication.  He’s none other than 89 year-old Joe Granville, infamous practitioner of technical analysis and publisher of the Granville Market Letter.

Granville was notorious for predicting, and even moving markets 30 years ago.  Recently he was rated the top market timer of 2011.

Granville told Bloomberg’s Adam Johnson that momentum, price and volume were a triple whammy telling a bearish story.

Granville said the key word was momentum.  He said momentum got to a new high and started going down while the Dow was still going up, which gives a very short term projection that we’re going down.

Granville said his book, written 52 years ago, has the answer of where the market is going this earnings season.  He said the January earnings season is a big one and his work tells him we probably topped out this past Friday.  However, his book had the ranges from 12  to 20 days.  He added we could rally for a couple of more days, but he doubts it.

Granville expects the market to head straight down for the next couple of weeks, and continue on down for the next couple of months.  He sees the Dow losing 1,000 points each quarter, or 4,000 points for the year.

Granville continued the interview talking about his indicators based on On Balance Volume (OBV) which have, “never let me down.”

One Comment

  1. New Low Observer

    January 26, 2012 at 3:33 pm

    The following are two random checks of Richard Russell’s mention of OBV based on the work of Joe Granville.

    “…my on-balance-volume index for the NYSE recorded a new high. And again on the same day my cumulative index for the most-active stocks touched a new high. The strength here was undeniable.” Russell, Richard. Dow Theory Letters. Issue 774. January 16, 1980. Page 4.

    The Dow Industrial average fell from 865.19 on Jan. 16, 1980 to 759.13 in the first week of April 1980 (-12%). Additionally, the Dow did not break above the long established range of 1,000 until 1982. Over two years later.

    “The third item (see page 2 chart) is that on-balance volume for the DOW turned down at the end of July and is continuing down. This is a negative and implies distribution. Note: on-balance volume is a daily advance-decline line of volume (this is based on Joe Granville’s thesis that ‘volume precedes price’).” Russell, Richard. Dow Theory Letters. Issue 1181. August 30, 1995. Page 1.
    The Dow Industrials rose from 4647.54 on August 30, 1995 to 7,000.89 (50%) in February 1997 before a discernible decline took place. Inevitably, the Dow rose all the way to 9,300 before experiencing it’s first 10% decline after August 30, 1995.

    It would be challenging to speak with confidence that declining OBV portends a market decline. In fact, on the surface, it could actually mean the opposite based on a non-scientific perusal of the topic.

    Thanks for providing a great site.


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