Monday’s decline wiped out all of the gains for the past month in the Dow. For many, it was “out of the blue.” However, we have been watching investor sentiment and the wave pattern, so we were ready for such an event. A word of explanation: In a corrective rally (read: bear market rally), the market-driven indicators can be “late to the… Continue reading
Just do the math.
This week’s financial news has been full of contradictions. The Wall Street media is hyper- bullish, but keep complaining that individual investors won’t “climb on board” until they see evidence of an economic recovery. Several analysts have labeled this rally as a “healthy bull” with the “broadest advance since at least the early 90’s.” (Wall Street Journal). Let’s tackle… Continue reading
The hardest job.
Being a Federal Reserve Governor can’t be very much fun. In the past three years there have been several “firsts”
and a number of admissions of ignorance:
• Twelve Discount Rate cuts in a row with no improvement in the economy.
• Fourteen consecutive unchanged risk statements (weakness) from December 2001 to January 2002.
•… Continue reading
This week appears to be the third week of reversals in the major indexes. We have seen a two-reversal signal given last August, so having the second reversal last week wasn’t a surprise, especially since the Dow, the S&P 500 and the Nasdaq 100 were showing signs of weakening. It was the broader Nasdaq Composite index that didn’t want to participate in the reversals… Continue reading
A second reversal week?
Last week we anticipated going bearish on stocks and bonds as the market showed signs of caving in after the final “mopping-up” in Iraq. Indicators were falling into place, calling for a market top. Our window for the top to occur was to be from April 11, 2003 to April 16, 2003, with Friday the 11th or Monday the 14th being… Continue reading
Conflict drawing to a close.
On Wednesday, as the image of Saddam Hussein’s statue being toppled was broadcast on television, the market hit it’s intra-day high. It has been down since. Public interest in the conflict in Iraq is waning. To prove the point, let’s have a pop quiz. (No cheating, or your final grade gets marked down!) The stock market… Continue reading
In last week’s newsletter, I mentioned that counter-trend rallies consist of three waves, while the trend- following patterns have completed five waves. This is why these bear-market rallies cannot compete with the main trend, according to the Elliott Wave Principle. Usually the rallies against the main trend only retrace 38%, 50% or 62% of the prior move down. Currently we have a three-wave sequence… Continue reading
Today’s rally marks the end of this phase of the bear market. It is now possible to see several days to a week or so of positive prices in the indexes. This, however, is not the end of the great bear. He (or she) is going to take a brief nap to gather his strength for… Continue reading
Look out below! We are fast approaching the October 2002 lows. Whether we stop there or continue our downward path is yet to be seen. Our next target on the Dow is the 7250 to 7450 range. That’s another 3-
5% down from here. Lower potential certainly remains. The October low was… Continue reading