Dow and Monetary Base

This follows on the previous post.  Each billion dollars the Fed creates makes the Dow jump about 4.9 points.  Since the Fed is pumping $85 billion/mo into the market, we can expect the Dow to go up about 400 points per month.

So, the stock market should keep rising until the Fed turns off the money pump.  Or until the correlation breaks down, but it has been going on for more than a year.  So, if this continues until the end of the year (8 more months), the Dow should hit 18,000 by year end.

Wait, waht?  We will see.