Friday, January 18, 2013

Citi's Tom Fitzpatrick: Dow Falls 20%+, Gold Soars to 2,400 and Initial Jobless Claims Rise

With the VIX down 8.25% today to 12.45, the lowest reading since June 2007, I thought I'd put up another technical bear to even out the sentiment. Tom Fitzpatrick, Global Head of CitiFX Technicals, sees the Dow falling 20%+, gold soaring to 2,400, and initial jobless claims rising from here. However, in the near-term, he said "he wouldn't be surprised if there is a little bit of legs here – maybe even up towards 1,495." On CNBC yesterday (embedded below), he said the S&P is trading "very similar to the way we traded into the highs in both 2007 and 2000." He also thinks the upcoming cyclical bear market will match the 1976-1978 decline, when the Dow declined 26.8% peak to trough (1976-1978). See more of his charts at King World News.

For example, here is Fitzpatrick's chart comparing the Dow's peak in 1976/1977 to today via King World News (see his chart on gold and initial claims there as well).

Source: CitiFX Technicals via King World News (hat tip Business Insider)


Here's a historical look at the Dow Jones Industrial Average between 1960 and 1980. The previous secular bear (before 2000-today) occurred between 1966 and 1982.

Source: StockCharts.com (historical chart)

Here is Tom Fitzpatrick on CNBC yesterday.




I remember he said this on CNBC in June of 2012 as well. For more bearish market predictions, see what Peter Lee (of UBS) and Tom DeMark (creator of the DeMark Indicators) said recently in the media. Both are widely followed technical analysts/market timers.

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