March 10 Update: Stocks are over bought. Investors should stay in cash or cash equivalents. Speculators may want to try short side of the trade. Stocks may be forming a double top. They are overbought for the short term. We had a minor decline that corrected the extreme bullish sentiment and it was followed by a rally that regained the lost ground. Typical of a bear market rally, the volume is heavier when the stocks decline, and it is lighter when the stocks advance.
USD dollar index is pulling back at wave 4, wave 5 up should follow soon. After wave 5, there should be the biggest USD decline (wave (2) of (5) ) since the rally started, setting us up for the real leg up in wave 3 of 5. Stocks may have an immediate decline, but USD decline at wave 2 should give the stocks some support until USD dollar rally resumes. Deflationary forces should continue to push US dollar higher unless FED prints more money.
March 2010: Is it a double top? Volume is declining on price advance, and it is surging on price declines.
January 14 Update:
Free 13-page Report: Robert Prechter's firm Elliott Wave International has just released its annual "Most Important Report of 2010." Inside, Prechter delivers hard facts, eye-opening charts and straightforward commentary to help you take advantage of the opportunities – and avoid the dangerous pitfalls – that you will face in 2010. You'll get analysis and forecasts you can act on, and you'll learn what the government's unprecedented involvement in the financial markets will mean for your portfolio in 2010 and beyond. Learn more and download your free report now.
January 5 Update: Prechter recommends investors to completely get out of stocks, bonds. Short term treasuries is the place to be. US dollar rally is real and should continue for 1 to 2 years. Speculators can take short positions.
Let us a take a look at deteriorating accumulation-distribution index:
As seen in the above weekly chart, S&P 500 index has retraced 50% of the initial decline since 2007 top. After a classic 1-2-3-4-5 decline, an a-b-c counter trend move has formed according to Elliott Wave Theory. Meanwhile, accumulation distribution index once again is going down while the prices are going higher. Same happened at 2007 top.
Check out the stock market crash that happened after DOW retraced 50% of the decline in 1930.
December 15 Update: CBC News - Prechter warns about the looming stock market decline.
November 23 Update: Prechter is bearish on Stocks. Bullish on the dollar. Market is at important resistance levels with great optimistic bias which is a contrarian indicator. Subscribe to short term update at Elliottwave International for frequent analysis of the markets, or the Financial Forecast and Elliott Wave Theorist for the big picture.
CNBC, November 23:
November 4 Update: Prechter on CNBC:
October 21 Update:
In his monthly Elliottwave InternationalElliott Wave Theorist newsletter, Prechter explains the limited upside possibility and the major downside target for DOW. He believes March lows will not hold. Please read his excellent book Conquer the Crash to understand why. Prechter turned bullish in February with a DOW target of 10000 in his Elliott Wave Theorist newsletter. Now he thinks the bear market rally has already ran it’s course. Subscribe to his short term update to learn support and resistance levels.
Have We Seen the Stock Market Bottom? The Big Picture
Robert Prechter explains the big picture with two unique charts that reveal the answer to the question: Where is the stock market bottom?
Housing Bubble - What Caused it?
Housing prices have been inflated along with stock prices for the last few decades due to credit inflation that FED has fostered. Here is a summary of what caused the housing bubble and why deflation hit housing.
Is it a Bear Market Rally?
Prechter on Bloomberg, June 19, 2009:
After predicting the last few months of bull market back in February, Prechter is expecting a pullback and then a rally into the summer to complete wave 2 with great crowd optimism that will lead to the wave 3 crash.
Stock Market Bottom Call - February 2009
Stock Market Top Call - October 2007
Become a member at Elliottwave International to get access to upto date financial forecasts:
Latest Developments in the Stock Market - September 2009
With second-quarter earnings largely in the books (over 99% of S&P 500 companies have reported for Q2 2009), today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% since peaking in Q3 2007, which makes it easily the largest decline on record (the data goes back to 1936). On the positive side, S&P 500 earnings have moved off their lows – slightly.
Source: http://www.chartoftheday.com/20090918.htm
Latest Developments in the Stock Market - August 2009
This chart illustrates how the recent plunge in earnings has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio). Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the recent plunge in earnings and recent stock market rally, the PE ratio spiked and just peaked at 144 – a record high. Currently, with 97% of US corporations having reported for Q2 2009, the PE ratio now stands at a lofty 129.
