Don, are you sitting down? Good. A little cheer from Barron's
We're Still in a Secular Bear Market
Financial Commentator
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Carlsbad, CA 92009
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(Tel) (760) 436-3574
AUGUST -- The rally of the last month has not changed my view that we are in a secular bear market. Sometime between now and next March, the market will fall below the lows of July 24.
In my June letter, I presented charts of the S&P 500 and the NYSE, describing the large head and shoulders pattern that had been developing since 1997. I suggested that a decline below 950 on the S&P 500, and 495 on the NYSE would "lead to gut-wrenching plunge." This pattern calls for a decline of 30% to 50% below the lows of July 24.
The only way I can envision a decline of that magnitude is if a financial crisis develops. Unfortunately, as noted earlier, given the record debt levels being carried by consumers and corporations, excess capacity, lack of pricing power, and ineffective monetary policy, a financial crisis is not farfetched.
-- Jim Welsh |
