The BAM-VI (velocity indicator) buy level remains negative but at least it’s now a -500 buy signal on the INDU.  The sell signal level however, has dropped all the way down to 15,500 (which is the lowest sell signal number in many, many months.)  What this is telling us, is that even if the market can rally on FED induced news between tomorrow and year-end (I don’t see that in my work) they should run into resistance very quickly and come right back down to make new lows early 2009.

The hourly model shows a violent set up with BOTH buy and sell signals set up and ready to trigger so although the intraday model says we’re headed lower (as does the hourly model) this should prove to be a violent thrashing move lower within a larger trading range as we decline.

When we come out of this low, the model is calling for a stampede to the upside (into March) but that shouldn’t occur until after the FEBRUARY 17-19ish period at which point the INDU might even be trading at 3971 if it can’t hold that 6606 magnet and that 6426 Fibonacci number.

I was probably the most bearish forecaster on the planet when the market was topping into October 2007 at the 14,198 level (at which time I was publishing a forecast of INDU 6606 during 2008), but the fact that I’m now talking about that 3971 target–which was, and is, a 2011-2015 BAM target–is amazing even me.

This sounds insane, but so did a crude crash to 47-36 when it was trading at 147 (and GS said it would trade to 200) but if they actually trade down to 3971 during February of 2009, I’m afraid I’ll have to start talking about INDU 1580 and even 480 into 2012-2015. 

These are disgusting number, but the greed and arrogance that led to 100x leverage and the writing of derivatives with nothing to back them is something the world has never seen before and it’s common sense that a decline after those types of mistakes is guaranteed to over-shoot on the downside. 

Full report coming soon