Who is right - Roubini or Marc Faber ?
Dow lost 315 points (-1.8%) to close at 17,280 on Friday. The best scenario that Dow can have is an 8% wave (xiv) pullback to 16,500 level. This is assuming what Roubini has told Yahoo Finance in early December is still right and Dow has another two years to go before 'the bubble pop'. Click to read.
However if Dow failed to hold at 16,500 level, then the next possible support is the 15,250 level, a 15% drop - major wave (6) correction. Under this scenario, what Roubini has said recently is still correct.
After the completion of major wave (6), we still have major wave (7), (8) and (9) to go. That can easily last for another 2 years or more and Dow will be setting more new record highs all the way to above 20,000.
However, if what Marc Faber has told CNBC in November, "I will soon be proven right" (click to read) is correct, I will expect Dow to plunge all the way to at least 10,655 level (-40%) for a mega wave 2 correction. My minimum projection is much worst that what Marc Faber has expected in 2012, 'a more than 20% correction'. My projection is assuming that the assets bubble has already burst. My maximum projection is a 100% retracement to the starting point of mega wave 1, the 6,547 level.
FBMKLCI (1,733)
KLCI dropped badly on Friday due to some forced selling on 'margin-call'. More margin-call next week may bring the index straight to my projected 1,686 level.
If Dow can hold for another 2 years, my reading for KLCI remains as major wave 4 correction and it is about to end.
Looking at the long-term chart, a normal mega wave (5) should have 5
waves. But, stock market has to remain as unpredictable for its own
existence.
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