Thursday, July 21, 2011

A Potential Grand Supercycle Bear Market

Looking at the very long term charts, it appears the western world has completed an economic expansion dating back more than 200 years, to the time the United States was founded in 1776. In Elliott Wave analysis, whenever 5 waves up are completed, there is a correction. The size of the correction is usually proportionate to the size of the uptrend that has completed. If we have indeed completed a structure dating back to the bursting of the south sea bubble in 1720 (with the proceeding Grand Super cycle Bull Market starting in 1784), then westerns markets will lose virtually all of their value. If the DOW were to follow a textbook pattern, it would fall to 40. That is not a misprint. That is, however, a decline of 99.7% and would represent the biggest bear market in 200 years as the credit bubble deflates. This is the worst case scenario  for now (there are other scenarios of wave structure that I will not go into) and would represent a complete retracement of all the credit inflation since the 1932 bottom. The bear market in this case would last approximately 100 years, although I expect the actual nominal price low to come very early into it (circa 2016).


5 comments:

  1. Absolutely Rubbish. You are forgetting something called as Growth. As per your stupid chart you must have been bearish since 1970.

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  2. Actually, Robert Prechter, a leading pioneer in Elliott Wave Theory, was super bullish in the late 1970's and wrote a book about it, called Elliott Wave Principle. Look it up, and next time do some research before you make such ignorant comments.

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  3. View such as amitabh are needed to make this bear market happen as in most cases such Bullish denial leads to disbelief and ultimately, capitulation. As elliott wavers know, it is sentiment and social mood which drives markets

    Prechter has been calling for a sub 1000 dow in 2016.

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  4. Unfortunately, that is the prevailing sentiment. As the market has been in this topping process the past decade, optimism has reigned with the exception of a few months in the 2007-2009 decline. If sentiment had been predominately bearish, that would be constructive for a scenario without a collapse. But that has not been the case. Sentiment has been euphoric throughout the whole topping process. That sentiment should change very dramatically in the coming years this decade.

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