Nice post indeed. I'll post the Reader's Digest version:
prudentbear.com
<snip>If this read is correct, we could be in a sideways market for a few years. This would make sense in light of the fundemental case I made at the start of what is becoming a novel of a post. I think the the long term cycles indicate a bottom for the market in 2003 and to start on a new wave at this time is kind of out of kilter with that timing. Elliott thought the top of this wave would be in 2010 and that seems to be good timing. From the 1987 bottom to the 2000 top was a little less than 13 years. If you consider the possibility of a truncated 5th, September 2000 would mark almost exactly 13 years and the fact the S&P was near record levels in September would lend credence to that idea. The previous bull lasted 5 years, from 1982 to 1987 and that would give a nice duration of the next bull, meaning an exit from the market in the 2008 period would be in order, with the whole thing then melting down. I think the debt structure of the world has received a mortal wound that may take time to kill the world economy in the sense the implications of a trillion dollar loss in telecom will take awhile to realize. A lot of it will be papered over the next few years only to have the scab ripped off later this decade and expose the malaise that lies below. That malaise is the rest of the debt structure that has been propped up by the enormous amounts of money created out of this illusion. That phenomenon, in itself is what ends bull cycles, not recessions or depressions, but the very thing that creates these events in the first place, over extention of credit. If telecom becomes insolvent, the entire financial structure of the world and the money beast itself will be exposed.
So much for my theories, but if one wants to know where I am coming from in my analysis, they can probably get it out of this post. I don't buy a new bull market starting right now until something proves my analysis wrong. I will start to change my view if the current rally passes 10,800 before taking out that 9960 level I see as so important in making an Elliott read. But even then, I have to keep my count on an equal footing until I can see a clear 5 wave structure taking out 11,350. The rally so far isn't revealing that type of structure. We might have completed wave a of a low degree at the bottom, setting the stage for the next decline being 1.618 times the roughly 1000 points we lost on this decline. That would put us in shape to hit my targeted area in the mid 9000's for this first bottom. Consumer spending, the only idea that common economists think supports the economy, won't support this economy, but take from the future instead due to the fact we don't fuel our economic growth out of our consumer purchases any more. These goods are made overseas and I don't believe sales clerks in Wal Mart are what is going to bring us out of this recession. We are wedded to technology and the financial leverage it has generated in the past to create credit and I don't believe we are at a stage to create the credit needed out of this lagging industry. So you have my fundemental and Elliott case for the market and I am sticking to it until the market shows me different. |
