Dow to Fall 15% in First Quarter of 2011: Charts
After the Dow Jones Industrial Average hit a new two-year high on Monday, expect the index to fall some 15 percent in the first quarter of 2011, Roelof Van Den Akker, senior technical analyst at ING Wholesale Banking told CNBC on Tuesday.
Van den Akker said a chart going back to the beginning of 2009 suggested the index was nearing the beginning of a falling pattern.
“We are getting very close to this price target and this at least suggests a short-term pause after the strong rally phase from its November lows,” he said.
“In my opinion, we are in the early stages of a top formation and the beginning of a correction, van den Akker said.
He expects to see a first decline towards around 11,000 points and a correction in the first quarter of this year to around 10,200 to 10,000 points, from the index’s close of 11,670.75 points on Monday.
“Everybody is turning bullish now,” van den Akker said.
He said bullish forecasts for the year 2011in combination with the chart’s trend provided “the best excuse to sell stocks at this moment and to return into the market 10-15 percent lower in the first quarter of this year.”