Joe Granville predicts Dow Jones average to drop 4,000 points in 2012

Joseph Granville at the ripe old age of 89 is still publishing his Granville Market Letter as he has been doing for more than forty years. Bloomberg's television Street Smart interviews him here.

In the interview Granville a technical analyst predicts that the Dow Jones average will drop by 4,000 this year. That is a good round number and gives an average drop of 1,000 per quarter.

More about Granville can be found at this Wikipedia entry. At conferences Granville is famous for his antics. Hulbert Financial Digest ranks his Market Letter poorly and claims that his advice would produce average losses over the past 25 years of more than 20 per cent.

However many people follow Granville still. His technical analysis uses OBV volume (On Balance Volume) to predict prices based upon volume.

A great showman Granville has emerged from a coffin to make his predictions at one investment conference and at another appeared to walk across water in a swimming pool. He has predicted that he will win the Nobel Prize in economics but so far he has been wrong about that! The video is here.

On the basis of trading volumes among other factors Granville predicted the market had peaked last Friday and would begin a decline this week. So far so good at least for Granville's predictions.