misc observation about the stock market

[muck]

The S&P500 is close to making new highs for the year; if it does (whether today, tomorrow or some time next week), do not be surprised if it runs further.

[muck]

Old high = 1150.23

Today's close = 1150.24

 

...and the market continued to trade higher after the close (fyi, the index futures trade for a few minutes after the closing bell)...

[BillyBalata]

just a wave, muck, just a wave.

[muck]

S&P500 closed at another fractional 52 week high today (1150.51).

 

It'll be interesting to see if it moves materially higher from here over the next couple of weeks (hitting 1200 - 1250?), or whether it drops from here.

 

I smell an inflection point. Just not really sure which way...

[cre8tiff]

S&P500 closed at another fractional 52 week high today (1150.51).

 

It'll be interesting to see if it moves materially higher from here over the next couple of weeks (hitting 1200 - 1250?), or whether it drops from here.

 

I smell an inflection point. Just not really sure which way...

 

You need to ask Brent.

[Brentastic]

You need to ask Brent.

I was just gonna say - you know which direction I think it's headed. But again, all my forecasts are only probablistic - my timing could be off by a year. Either way, the market is going to tank sometime soon (relatively speaking).

[Jackass]

I was just gonna say - you know which direction I think it's headed. But again, all my forecasts are only probablistic - my timing could be off by a year. Either way, the market is going to tank sometime soon (relatively speaking).

 

So now we have to wait a whole year before calling you out. I was looking forward to bringing up your prediction of the Dow hitting 6000 by spring.

[cre8tiff]

So now we have to wait a whole year before calling you out. I was looking forward to bringing up your prediction of the Dow hitting 6000 by spring.

 

Spring 2011? 2012? 2013?

[Brentastic]

So now we have to wait a whole year before calling you out. I was looking forward to bringing up your prediction of the Dow hitting 6000 by spring.

 

Any investor who sold all his stocks back in 1928 was probably viewed, at the time, as ignorant. In hindsight, however, those investors, although their timing was a year or more off, were probably viewed as insightful and prudent investors.

 

My point - and I've said this all along if you've actually read all my posts - is that the timing of any reversal is never reliable and rarely consistent, only the form of the waves is reliable. I've also cautioned all along that any forecast is based only on probabilities, never certainty. I've reiterated many times that there is never certainty and definitely no certainty on the timing. Back in January when I accurately forecasted the market drop (the DOW dropped 800 points within weeks of my initial post calling for a reversal), I thought that was the start of the big crash I'm anticipating. The DOW is still below the Jan 19 highs, and therefore my forecast is still technically on track. BUT, with all that being said, the DOW is fast approaching that Jan 19 high (10,725) and if reached, will alter the previous wave count. However, this possibility of a new wave count will not change the near long-term outlook of a major crash, it will only mean that the bear market rally that started last March is not yet complete. Either way, at least per the EWT, the market is exhausted and due for a major drop. Whether that happens this year or next, it's going to happen soon (relatively speaking).

 

I guess what I'm saying is you can call me out now - it won't affect my approach to investing nor will it prevent me from posting market forecasts or discussions because that's all I study on my free-time, it's my favorite hobby. In the end, I'm still confident my 5 year window of a market low will be realized and I believe many of you will wish you had been more prepared for the market crash I keep talking about. Let's see how this all plays out over the rest of the year. I said DOW 5,000 sometime this year and there's 9+ months left in the year.

[Jackass]

 

Any investor who sold all his stocks back in 1928 was probably viewed, at the time, as ignorant. In hindsight, however, those investors, although their timing was a year or more off, were probably viewed as insightful and prudent investors.

 

My point - and I've said this all along if you've actually read all my posts - is that the timing of any reversal is never reliable and rarely consistent, only the form of the waves is reliable. I've also cautioned all along that any forecast is based only on probabilities, never certainty. I've reiterated many times that there is never certainty and definitely no certainty on the timing. Back in January when I accurately forecasted the market drop (the DOW dropped 800 points within weeks of my initial post calling for a reversal), I thought that was the start of the big crash I'm anticipating. The DOW is still below the Jan 19 highs, and therefore my forecast is still technically on track. BUT, with all that being said, the DOW is fast approaching that Jan 19 high (10,725) and if reached, will alter the previous wave count. However, this possibility of a new wave count will not change the near long-term outlook of a major crash, it will only mean that the bear market rally that started last March is not yet complete. Either way, at least per the EWT, the market is exhausted and due for a major drop. Whether that happens this year or next, it's going to happen soon (relatively speaking).

 

I guess what I'm saying is you can call me out now - it won't affect my approach to investing nor will it prevent me from posting market forecasts or discussions because that's all I study on my free-time, it's my favorite hobby. In the end, I'm still confident my 5 year window of a market low will be realized and I believe many of you will wish you had been more prepared for the market crash I keep talking about. Let's see how this all plays out over the rest of the year. I said DOW 5,000 sometime this year and there's 9+ months left in the year.

 

Ahhh, the timing. My bad. So the market will fall but you don't know when. That's helpful. Meanwhile we'll all just short the market watching our investment lose money until D-day comes and we all become millionaires.

 

But i do feel better that i only have to wait 9 months. I think, anyway.

 

I'm honestly not even sure you know what you're saying. First you say "whether it happens this year or next" Ok fine. Then you say "I'm confident in my 5 year window". Then you say Dow 5000 sometime this year. I'm sure there's an explanation in there somewhere of how all this makes sense.

[Brentastic]

Ahhh, the timing. My bad. So the market will fall but you don't know when. That's helpful. Meanwhile we'll all just short the market watching our investment lose money until D-day comes and we all become millionaires.

 

But i do feel better that i only have to wait 9 months. I think, anyway.

 

I'm honestly not even sure you know what you're saying. First you say "whether it happens this year or next" Ok fine. Then you say "I'm confident in my 5 year window". Then you say Dow 5000 sometime this year. I'm sure there's an explanation in there somewhere of how all this makes sense.

I've probably written well over 50 posts on this topic, yet you still find a way to spin my very clear message into something that's ambigous or taunt me for not being exact in my forecasts. The market is very complex and therefore any theory that attempts to forecast market behavior is going to be very complex. The wave theory I study is complex and there is no way to sum it all up in one post or even a handful of posts. I believe that of all my posts I have done a pretty good job of summarizing the wave theory while always being clear that timing is the least probable aspect of forecasting while always maintaining that my forecasts are based on probability, not certainty. Back in January I wrote a post forecasting the decline had begun - based on the EWT and some other technical indicators my forecast had (and still has) a very high probability of being correct (hence my confidence at that time) - and since the DOW is still below the high of Jan 19, my forecast is still on track. If that forecast comes to fruition (ie... the DOW reaches 5000 this year), then my timing in that instance was amazing. However, being a rational investor, I have to always be prepared for the market to do something unexpected, however low that probability may be, it's still a possibility.

 

If you're looking for a definitive moment in time when the market will crash or a definitive price point in which it will reverse, you will never find that consistently. In all of my posts though, the general message is clear - I think the market is going to tank very soon and the duration will be about 3-5 years (meaning the bottom will take that long). I thought the DOW would be tanking harder by now, but obviously it is not living up to my immediate expectations. I've also been consistent in saying the DOW will hit 5000 this year - I never said this spring or in a month, because again, timing is too hard to predict. Will I be 'wrong' if the DOW hits 5000 in 2011? I'd say only my timing was wrong.

 

Bottom line, you can take what you want from these posts of mine. I'm not sure why you're the only one who seems to get upset by my forecasts. I'm not offending anyone or hurting anyone's feelings. I'm trying to share my thoughts on the economy/market based on something that I've studied and believe in. If the DOW hovers around 10-11K for the next 6 months to a year then bottoms out - do you think I will be 'wrong'? A better question is do you think I will care if you think I'm wrong? Nope. Does it even matter if I'm 'right' or 'wrong' - nope.

 

I'm a risk averse investor - my only goal is to not lose money. I can be 'wrong' more than 50% of the time and still not lose money. Speculators can be 'right' 99% of the time and lose their entire portfolio the one time they're wrong. So which approach is better? Which investor should you mimic? I'm trying to let as many people to know, at the very least, be careful right now, don't trust what the media and goverment are saying about a recovery. Don't believe everyone saying we can never have another depression or there will never be another run on the banks. These are very grim economic times and there's still a lot of covering up going on by a lot of agencies, companies and goverment. The Fed may succeed in masking the root problems and in doing so, they may delay the inevitable for another decade or so. Obviously based on my forecasts, there is a very low probability of happening, but there is some amount of probability attached to it and therefore it must be considered.

 

IF the DOW reaches it's Jan 19 highs again, then I will re-evaluate the wave count and the probability of another near-term target price - but as it stands now, my initial forecast is still in tact. I'm very open-minded, more than most people. So for me it's easy to forsee several possible outcomes - all with varying probabilities of course. And none of the possible outcomes makes me angry or confused, I just know they are there and I have to mentally prepare for each outcome. It seems like you need to have it in black or white. The stock market is never black and white my friend and it's an organism that has a life of it's own. It will do what you least expect just when you think you have it figured out and understanding that is part of the process.

 

So please, moving forward, try to avoid getting angry about my forecasts. I'm not 'waffling' and I'm not changing my story - it's been consistent throughout but the probabilities change. The closer the DOW gets to 10,725, the lower the probability we have begun the dreaded 'wave 3' - but again, regardless of the near term movement by the DOW, my 3-5 year forecast remains the same, I am very BEARISH.

[wiegie]

Brent, I'm just wondering: What evidence would it take for you to admit that the Wave Hypothesis is not valid?

[Jackass]

I am neither upset nor angry.

[Brentastic]

Brent, I'm just wondering: What evidence would it take for you to admit that the Wave Hypothesis is not valid?

If the DOW fails to break the March 2009 lows relatively soon (next couple of years) I will question the wave theory. Since my forecast of the DOW hitting 5000 this year is only an educated guess, it is not a requirement of the wave principal, only an assumption by me. The DOW does, however, need to at least break last March's lows in order to remain valid. As long as the decline begins relatively soon (it has begun already, but a break of the 10,725 point would negate the idea that the decline has started) there is no rush for the DOW to reach that mark.

 

So basically, any move with the main trend (in this case, down) should move in 5 waves. The odd number waves are called 'motive' waves and they are considered actionary (move with trend). The even numbered waves are corrective and move against the trend of a higher degree. Per my count, which is still valid, wave 2 (a corrective wave) topped on Jan 19 (10,725) in the DOW. As long as the DOW remains below that point, wave 3 is valid. If we rise above it, then wave 2 has further to go - regardless, wave 3 is here or soon on it's way. Wave 1 has been confirmed and bottomed last March, which is when wave 2 began. Wave 3s are usually the most severe of all waves but the only requirement of a wave 3 is that it can't be the shortest wave (ie.... length or price movement).

 

This week should really unveil some information about where we are headed near term.

[Atlanta Cracker]

Why couldn't the March 9 lows mark the beginning of Wave 1 of an uptrend? Still means we'd be due for a wave 2 correction but not as dire as a Dow 5000 prediction.

 

The market is overvalued right now by many metrics but my opinion is that it will hover around the current level +/- 10% for the next few years until that is no longer the case and there is some catalyst to move it higher. There are still some pretty big issues to be resolved so I don't think an extremely cautious approach is a mistake right now.

[wirehairman]

I'm a risk averse investor - my only goal is to not lose money.

 

That statement gives me a lot better understanding of your posts and predictions.

 

Other than avoiding the market and waiting for the sky to fall, how does your "wave theory" work for someone who's main goal is to make money off his/her investments?

[Ursa Majoris]

That statement gives me a lot better understanding of your posts and predictions.

 

Other than avoiding the market and waiting for the sky to fall, how does your "wave theory" work for someone who's main goal is to make money off his/her investments?

I was going to pick out that exact quote too. Surely if the only goal is not to lose money, stuffing it under the bed in sacks would be a lot easier?

[Avernus]

That statement gives me a lot better understanding of your posts and predictions.

 

Other than avoiding the market and waiting for the sky to fall, how does your "wave theory" work for someone who's main goal is to make money off his/her investments?

 

 

right now it's much easier to say what will go wrong, but to say what will go right is an enigma...

 

there is a recipe for disaster within our economy and you should try investing in what you think will prevail in the long term.....or short term even if that's your game...

 

the stock market is being propped up so obviously that it's a joke and another thing you have to consider is how bad the impact will be when we have to change our lifestyle - even if it's only just a little bit..or if it's a lot...

[Big John]

I was going to pick out that exact quote too. Surely if the only goal is not to lose money, stuffing it under the bed in sacks would be a lot easier?

Except he was already burgularized.

[polksalet]

What Dave Ramsey said, because I don't know enough to follow what any of you are saying.

[Brentastic]

That statement gives me a lot better understanding of your posts and predictions.

 

Other than avoiding the market and waiting for the sky to fall, how does your "wave theory" work for someone who's main goal is to make money off his/her investments?

Well, I want to make money too, but this reversal is of such a large degree, that I feel it's imperative to not be long right now. If this was just a normal yearly correction that I'm forecasting, I wouldn't be so adamant about the situation. The wave theory, IMO, is the best tool for investors because it let's you know where the market is at any scale of degree. For instance, let me briefly explain that any correction moves in 3 waves (labeled A, B & C). Right now we are in corrective wave a of Supercycle degree - a Supercycle degree lasts around 40-70 years. The largest scale degree is Grand Supercycle of which we are currently in wave 4 (again, a corrective wave but of a large degree). If we were merely in a corrective wave of primary degree I wouldn't be selling stocks, I would be buying more at cheaper prices.

[Brentastic]

I was going to pick out that exact quote too. Surely if the only goal is not to lose money, stuffing it under the bed in sacks would be a lot easier?

Yeah, but that would be saving, not investing.

[Brentastic]

right now it's much easier to say what will go wrong, but to say what will go right is an enigma...

 

there is a recipe for disaster within our economy and you should try investing in what you think will prevail in the long term.....or short term even if that's your game...

 

the stock market is being propped up so obviously that it's a joke and another thing you have to consider is how bad the impact will be when we have to change our lifestyle - even if it's only just a little bit..or if it's a lot...

I've really wondered if the government is propping up the stock market too. I read somewhere that the entire rally from Nov 09 - Jan 10 (last 3 months) was mostly from institutional investors, not the common investor like you and I. You know they are trying to make the market appear to be doing ok, so all the normal investors will start buying and then the big institutions will have someone to sell to.

[muck]

A new 52-week high on the S&P500 today...

[TimC]

When the anarchy strikes and we're all running through the streets naked and starving, I'm gonna run by Brent and grab him and yell over the madness that he was right all along. He'll be smiling and saying how he told everyone he knew it all along and nobody listened to him. He'll start mentioning some wave theory and I'll beat him with a stick and barbeque him. It'll be awesome.