Monday, February 13, 2012
Bear Market Rallies and B wave psychology
As can be seen, the B wave bear market rally retraced part of the initial decline from the 1929 top. The C wave then carried the market down to MUCH lower lows, and by the time the bear market was over the market had lost 89% of its value. I believe we are in for a similar decline, and my target remains the same of below 800 on the DOW. The sentiment currently out there is certainly consistent with the top of a bear market rally, with some sentiment exceeding extremes seen at the all-time high in October 2007. Many who were calling it a bear market rally before have given up and turned bullish. The same thing happened by the top of the B wave in April 1930. The difference this time is that everything is bigger. The bubble is bigger, the upward retracement is bigger, and the lies are bigger. Ultimately, the decline should be bigger as well. This kind of environment is why it is important to NOT listen to the talking heads on CNBC and stay safe in the safest possible cash equivalents. The collapse of our debt-money system is dead ahead, and by the bottom the bear market nobody will even think about buying stocks, but of course that is the time when attractive valuations show up in the market and that is the time to buy. But its IMPERATIVE that people remain safe during this time. The C wave is out there, should be much worse than 2008, and likely worse in percentage terms than 1929-1932. This time everything has been magnified. The debt bubble is bigger, and the central planners have done even more to try to prop the system up. It will not work, and their efforts will only serve to make matters worse. I believe we are very close to the top of this B wave bear market rally. The C wave is next, and its NOT going to be pretty.