2007 Market Forecast

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On November 13, 2007, The Wall Street Journal reported that the Dow industrials jumped 319.54 points, or 2.5%, to 13307.09, which is the second-biggest point and percentage gain this year. On November 14, 2007, Wall Street reported that after the opening bell, the Dow Jones Industrial Average was up 48.86 points, or 0.4%, at 13355.95. Investors are hoping to build on those gains, which included the 319.54-point rally in the blue-chip average that snapped a four-day losing streak. Standard & Poor’s 500 was up 8.57 points early, or 0.6%, at 1489.62. The Nasdaq Composite Index was up 0.5%, or 12.47 points, at 2683.15.
The current issues driving the stock market are the high price of crude oil, little consumer spending, concerns about inflation, and the slump in the housing market, and additional government spending associated with military activities in the Middle East.
Another issue that drives the performance of the stock market is the American dollar does not seem to be as “Almighty” right now as it has hit record lows against other major currencies, such as the Euro, the British pound and the Japanese Yen. However, strong economic growth, low inflation, and low unemployment rates should strengthen the value of the dollar.
The economy appears to be weakening as crude oil prices have reached an all-time high and the sub prime mortgage woes are deterring potential homebuyers and creating concern with Wall Street traders. However, the economy and stock markets should perform well in the weeks and months ahead according to Wall Street writers, Gary McWilliams, Cheryl Lu-Lien Tan, and Kelly Evans. They reported that according to consumer surveys it is estimated that holiday spending will rise about 4% that is near the 4.8% average increase for the prior 10 years. Surprisingly, the low consumer expenditure level within the past year indicates that this will not have a major impact on the economy. The stock market will be volatile in the short run as the economy slows. but that does not stop shoppers around holiday season and, in order to compete, retailers are shifting their focus to their online business, maintaining fewer inventories, and cutting labor costs. Lauren Villagran of the Columbus Dispatch, reported that Wal-Mart, the world’s largest retailer, had surpassed profit projections in the third-quarter which hints that consumer spending might be stronger this holiday shopping season.
It is my belief that the economy will slow down as we approach the holiday consumer-spending season. I predict that consumer spending will decrease due to record high prices for crude oil, which contributes to high gasoline prices. In addition, the unstable housing market, which was primarily created by the sub prime mortgage dilemma, has sent the financial markets into turmoil and instability. The high price of gas has taken money out of the consumer’s pocket for and the declining value of homes could lead to people saving more money due to their insecurity of “just in case.”
Therefore, if inflationary pressure requires people to spend more money on gas along with more money on retail sales, will we have an additional credit issues? Is the drop in stock prices a sign of the slowing economy or is it a reaction to the trouble in credit markets?
While things may be unstable and stocks prices are fluctuating up and down, remember October 19, 1987. This date marked a place in history as the U.S. market lost one quarter of its value in just a few hours. Do not forget about October 29, 1997 when the DOW lost 550 points in just one day due to worries over emerging markets. October 1929 is also a crucial time in history known as the Wall Street Crash, when the Dow Jones Industrial Average plunged 12.8% and the day after, when it lost another 11.7%.
This financial crisis created the most protracted global depression in history. However, we must not be quick to jump to conclusions, the last century’s two worst bear markets occurred in the 1972-74 slump after Opec’s decision to hike oil prices along with the decade long decline in Japanese share prices since the end of the 80’s. We can draw comfort knowing that of the Britain’s 25 bear markets in the past century, 21 have corrected themselves after a loss of 35%.
Obviously things change with trends and there is no true way to project what the DJIA Index will be by ends year, but an educated guess as to what the DJIA Index will be at year end will depend on the sub-prime mortgage crisis, consumer spending during the holidays and whether the Federal Reserve raises or drops interest rates. However, using past market period history along with the help from the Down Jones indexes from the internet, my answer at what level the Dow Jones Industrial Average Index will be by year-end is 13342, and I defend that answer with the below research from The Wall Street Journal.
On November 14, The Wall Street Journal reported that about 45 minutes before the start of trading, Dow Jones Industrial Average futures had risen 60 to 13390. S&P 500 futures added 9.3 to 1492.6, and Nasdaq 100 futures were up 24.25 to 2091. As of November 14, 2007 at 9:30 am, the following chart represents the numbers on today’s market.


Dow Jones Industrials 13307.09 319.54 2.46

S&P 500 1481.05 41.87 2.91

Nasdaq Composite 2673.65 89.52 3.46

Russell 2000 789.15 22.06 2.88


Gold, Dec. 816.00 17.00

Crude Oil 92.40 1.23


10-Year Note 4.3140 -11/32


Yen (per dollar) 111.7100 110.89

Euro (in dollars) 1.4703 1.4602

Source: Reuters and Dow Jones * At close
Note: Closing quotes are preliminary

In order to be able to understand the market, I obtained the closing price from the website, http://online.wsj.com/mdc/public/npage/2_3051.html?mod=mdc_h_dtabnk&symb=DJIA for DJI for months September through October 2007 as well as the last five years.
Ending November 13, 2007
Historical Quotes
Dow Jones Industrial Average’s closing price

Date Closing Price Open High Low Volume
11/13/07 13307.09 13,064.77 13,357.57 12,982.18 295,894,700

Ending October 30, 2007
Historical Quotes
Dow Jones Industrial Average’s closing price

Date Closing Price Open High Low Volume
10/30/07 13792.47 13,817.02 13,930.91 13,719.80 187,480,000

Ending September 28, 2007
Historical Quotes
Dow Jones Industrial Average’s closing price

Date Closing Price Open High Low Volume
09/28/07 13895.63 13,896.76 13,994.64 13,802.96 194,468,600

The last past five years, historical data for DJI was listed as the following:
Ending December 20, 2006
Historical Quotes
DJ Industrial Average’s closing price

Date Closing Price Open High Low Volume
12/20/06 12463.87 12,462.34 12,549.35 12,393.45 191,460,900

Ending December 20, 2005
Historical Quotes
DJ Industrial Average’s closing price

Date Closing Price Open High Low Volume
12/20/05 10805.55 10,827.72 10,905.28 10,754.56 248,690,800

Ending December 20, 2004
Historical Quotes
DJ Industrial Average’s closing price

Date Closing Price Open High Low Volume
12/20/04 10661.60 10,697.66 10,769.13 10,622.20 297,283,200

Ending December 30, 2003
Historical Quotes
DJ Industrial Average’s closing price

Date Closing Price Open High Low Volume
12/30/03 10425.04 10,442.89 10,493.09 10,374.52 128,425,200

Ending December 30, 2002
Historical Quotes
DJ Industrial Average’s closing price

Date Closing Price Open High Low Volume
12/30/02 8332.85 0.00 8,405.67 8,214.93 197,901,100

Below is a projected quote listed from the website, http://online.wsj.com/mdc/public/page/2_3028.html?category=Index&subcategory=U.S.&contract=&catandsubcat=Index%7CU.S.&contractset=FTSE%2520100%2520Comp.%2520-%2520liffe.

DJIA Comp. – cbot
Data retrieved at Nov 15 14:47:55 GMT • All quotes are in Greenwich Mean Time • Data provided by eSignal

Contract Month Last Chg Open High Low Volume OpenInt Exchange Date Time

Dec ’07 13205
-70 13274 13310 13190 0 35497 CBT 11/15/07 14:37:47

Mar ’08 13352 y
0 690 CBT 11/15/07 09:49:36

Jun ’08 13435 s
-55 13435 13435 13435 0 3 CBT 11/14/07 22:07:40

Sep ’08 13515 y
0 1 CBT 11/14/07 22:07:40
– Chart – Options – Quotes


Trivoli, George. Personal Portfolio Management: Fundamentals and Strategies. Prentice Hall, Upper Saddle River, NJ.







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