A 40% rally in the Dow?

A 40% rally in the Dow by year’s end? This seemingly farfetched scenario is laid out in an article at Kitco that uses an overlay of the Nikkei Index to make its case.  Take a look and see what you think. Here’s the link:

http://www.kitco.com/ind/Wilson/sep012009.html

I received the link myself from a longtime subscriber and replied –skeptically –as follows:  

“It’s always fun to speculate, Phil, but truth to tell, I haven’t seen a chart-overlay fantasy play out in all the years chart-watchers have been sending them to me. Not even once.

“I have particular trouble buying this set-up, however, because, for starters, I am bearish on the USD. Also, Japan’s economy was in far better shape in 1998, even mired in deflation, than the U.S economy is today.  They also had something to counteract deflation that we do not: an insatiable U.S. consumer who made Japan’s export-heavy economy hum.  Still, I guess anything’s possible, and if Fibonacci numbers are destiny, then the envisioned rally certainly could happen as depicted, with extreme monetary easing substituting for whatever factors pushed the Nikkei into a last-gasp, Wave IV rally.”