Expect The Unexpected
by Charles B. Carlson, CFA
Dow Theory Forecasts

I happen to think that this market will be locked in a trading range from 7000 to 9500 on the Dow. One reason is that I don't expect corporate profits to grow at the type of pace that is needed to catapult this market to the 10,000 level or beyond. I think profits will grow, but at a fairly conservative rate.

Having said all that, however, I acknowledge I could be wrong. Why? Because in my 20 years of following the market, I've come to expect the unexpected.

Lots of investors tell me that they just can't see how this market can move much higher over the long term. Sure, you might get a small rally periodically. But rallies won't last, not with war looming in the Middle East, the economy still lousy, and corporate profits soft.

However, smart investors know that the reasons a market surges higher usually aren't seen until well after the fact. That is the nature of market moves. They don't respond to what you can see. They respond to what you can't see.

Bottom line: Expect the unexpected. That's what usually happens in the market.

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