QUICK LOOK REPORT #5: DJIA Index
QUICK LOOK REPORT #6: Northrop Grumman
by Dr. Stephen Rinehart
June 29, 2005

Background:
Quick Look Reports will look at a possible dominant trend in an Index, Equity or Commodity and some possible long-term (yearly) trends which could emerge from the dominant cycle(s) (the datasets will be weekly or monthly with the shortest cycle about 7 to 15 weeks or months). Quick Look Report #5 looks at an update to the weekly prices of the DJIA Weekly Index from 1918.

The primary seven weekly cycles in the DJIA Index are at 40, 52, 69, 109, 233 and 354-weeks (looks almost identical to S&P 500 weekly Index). These cycles represent an approximate (within 15%) fit to the amplitude/phasing of the long term weekly DJIA Index from 1918 thru June 2005. A prediction of the DJIA Weekly was made in July 2004 (see FSU Archives Rinehart on Magnificent Seven). A comparison of the actual versus weekly predicted closing prices is shown in Chart 1. There is a shift of about five weeks in the predicted versus actual closing price waveform of the DJIA but the smallest cycle in the predicted waveform is 40-weeks! The attached Table shows the numerical values and error between weekly DJIA prediction and actual closing DJIA Index.

The largest cycle in the DJIA Index weekly closings (the 354-week cycle) is shown in Chart 2. This major cycle is currently forming a top (max predicted peak in July 2005) and will start taking the DJIA down with it after Nov 2005. There is no long-term bull market in the DJIA Weekly Index again until this cycle bottoms in Sept 2008! 

Chart 3 shows the prediction for DJIA Weekly Index which should form its final top in Nov 2005 and the comes the Secular Bear Trend (June 2006 thru July 2008+). The DJIA is predicted to drop significantly after June 2006 and why do you think the Fed wants to keep pumping up this Index after mid-2006? The Central Banks own/control the 354-week cycle and we have a possible coming worldwide recession in the making. The 354-week cycle will be heading downward in mid-2006. It is highly questionable as to whether the DJIA will see another top as high as the ones in 2005 again for the next four years!?

Chart 4 shows the possibility of a 37-year K-Wave in the DJIA from 1906. If it exists, it formed a top in 2002. The continuous devaluation of the US Dollar since 1918+ is reflected in the increasing amplitude of this cycle as it is in all cycles. Currently, the major indices are being carried by money pumping and outright purchases of securities by Central Banks.