Thursday, August 4, 2011

A brief review of bear market targets

The action in the market today helped solidify the case that the bear market rally is over and the bear market that began in 2007 has resumed. Whether or not this was the actual top to this bear market rally I think is immaterial. What is important is that people keep their wealth intact by getting out of all traditional investments, so that when the final bottom does come, people will have the money to capitalize on it. That being said, I want to briefly go over my target levels for the bear market low. My first target (which could very well be the bottom, let's hope it is) is below 800, and ideally at DOW 770, the 1982 low. If that fails to hold the next target would be the 1974 bear market low at DOW 570. If that fails we are likely looking at a move below 400. The target range there would be 40-386, the range of the 1929-1932 bear market. Whichever of these levels the DOW finds support at, I expect it to be undercut slightly in a capitulatory move to the final low before a new Bull Market begins. As I have stated before Banks are going to ZERO and I am sticking with that target.


  1. You seem fairly knowledgeable but are you seriously predicting the DOW to go from today's 11,383 all the way down to 770?!?

    The worst recession since 1929 saw the DOW only drop to a figure nearly 10x that.

    Sentiment is poor and a double dip more likely than it was a few months ago it seems but there would have to be a global catastrophe for the sentiment to drop the DOW 15x lower than its present level. An asteroid strike; an alien invasion perhaps? Apple alone could prevent the market from tanking below a certain level (that I wouldn't know how to calculate) just based on its revenues. Steve Jobs for president maybe?

  2. Essentially I believe we have completed an economic expansion going back to the beginning of the United States in 1776. Another reason I am so negative is we had an unprecedented credit expansion, really the biggest credit bubble in world history. We are going to have to come a long way down to correct those excesses. The best way to weather the storm is to keep your wealth in the safest possible cash equivalents, because even though you are not making a return on your money, you are getting the return OF your money, a privilege most will not receive. Hope this helps. Good Luck.