Sorry, I am presuming that folks have seen the TommyBear post before. It's been talked about sooo many times. Here is the entire thing:
______________
The Upcoming Killer Wave & Cycle Bloodbath:
Part II
Posted By: Tommy Bear
Date: Sunday, 12 November 2000, at 3:13 p.m.
[Condensed from a series of e-mails made available August 17, 2000; Revised November 12, 2000]
Before I begin, you should know that I agree with Robert Prechter that the next major bear market in the Dow will be of Grand Supercycle degree. The last time a Grand Supercycle bear market began was 1720, the year of the peak of England's South Sea Bubble and France's Mississippi Madness. Although that bear market lasted approximately 64 years, the first leg down was the most vicious part, collapsing stocks 98% in just two years. While that leg down was of Supercycle degree (i.e., the same degree as the entire 1929-1932 move which brought stocks down 89% in just shy of 3 years), it was particularly vicious because it was a down leg in a Grand Supercycle BEAR market (whereas the 1929-1932 down move was a corrective wave in a Grand Supercycle BULL market). By contrast, the two Cycle degree bear markets since 1932 brought stocks down 52% in 5 years (1937-1942) and 45% in two years (1973-1974), i.e., much more modest declines by comparison.
Although Prechter anticipates the next Grand Supercycle bear market to be approximately 100 years in length, the only portion that concerns me at this point is the first Supercycle leg down in that bear market, as that move is likely to exceed the intensity of the 1929-1932 experience. As the 1929 down move occurred over a 34 month period (a Fibonacci number), my best guess at this point is that the upcoming down move may be close to a Fibonacci 1.618 times as long or approximately 55 months in length (another Fibonacci number). The expected decline in the Dow during this period is 91% to 98%.
Robert Prechter, in "At the Crest of the Tidal Wave," said, on the subject of the probable pattern of the first leg down: "Regardless of which specific long term pattern ultimately unfolds at Grand Supercycle degree, there is no question that the first Supercycle degree decline will be of the zigzag family. It will be composed of three waves, to be labeled A-B-C or W-X-Y. Every initial decline through Primary degree (the "first" waves), and probably through Cycle degree (Wave A), will be composed of five waves in order to be compatible with the larger trend." To translate this for you non-Elliott Wavers, the first big move down (Cycle Wave A) should be a 5 wave move (down-up-down-up-down), followed by a big move up (Cycle Wave B) in a 3 wave move (up-down-up), then followed by a final big move down (Cycle Wave C) in a 5 wave move (down-up-down-up-down).
The most logical time pattern of this sequence, if indeed it is approximately 55 months in length, would be a Wave A that is a Fibonacci 21 months in length, a Wave B that is a Fibonacci 13 months in length and a Wave C that is a Fibonacci 21 months in length (i.e., equal in time to Wave A). For Wave B, it would be logical for the breakdown of that 13 month move to be an up leg of 5 months, followed by a down leg of 3 months, then followed by another up leg of 5 months. Again, this is purely guess work at this point but, as I said, I'm searching for the most probable bearish pattern if the Dow did indeed reach its Grand Supercycle Wave III peak on January 14th.
If we were forced to modify the above ideal Elliott Wave scenario based on what the cycles tell us, the big surprise is that little modification is necessary. As you will see, the cycles project a move that is 54 months in length, consisting of a 20 month five wave down move, a 14 month three wave up move, then a 20 month five wave down move. The up move is broken down into 5 up months, followed by 4 down months, then followed by 5 up months, i.e., very close to the 5-3-5 sequence stated above.
Here's the breakdown by wave and month. The first column references the location within the 8.6 month cycle, and the second column references the location within the 40 month cycle; months that have brackets are key months under Armstrong's 8.6 year cycle analysis; the month designated with "G" is the month in which gold's 8 year cycle is expected to bottom; and the month designated with "K" is the month in which the 55 year K-Wave cycle is expected to bottom:
Cycle Wave A
Wave (1) Down
Jan. 2000 7 27
Feb. 2000 8 28
Mar. 2000 9 29
Wave (2) Up (most probable corrective pattern: sideways)
Apr. 2000 1 30
May 2000 2 31
June 2000 3 32
July 2000 4 33
Aug. 2000 5 34
Wave (3) Down
[Sep. 2000] 6 35
Oct. 2000 7 36
Nov. 2000 8 37
Dec. 2000 1 38
Jan. 2001 2 39
Feb. 2001 3 40 G (Gold bottom)
Wave (4) Up (most probable corrective pattern: sharp)
Mar. 2001 4 1
Apr. 2001 5 2
Wave (5) Down
May 2001 6 3
June 2001 7 4
July 2001 8 5
Aug. 2001 9 6
Cycle Wave B
Wave (A) Up
Sep. 2001 1 7
Oct. 2001 2 8
Nov. 2001 3 9
Dec. 2001 4 10
Jan. 2002 5 11
Wave (B) Down
Feb. 2002 6 12
Mar. 2002 7 13
Apr. 2002 8 14
May 2002 9 15
Wave (C) Up
June 2002 1 16
July 2002 2 17
Aug. 2002 3 18
Sep. 2002 4 19
Oct. 2002 5 20
Cycle Wave C
Wave (1) Down
[Nov. 2002] 6 21
Dec. 2002 7 22
Jan. 2003 8 23
Wave (2) Up (most probable corrective pattern: sideways)
Feb. 2003 1 24
Mar. 2003 2 25
Apr. 2003 3 26
May 2003 4 27
Wave (3) Down
June 2003 5 28
July 2003 6 29
Aug. 2003 7 30
Sep. 2003 8 31
Oct. 2003 9 32
Wave (4) Up (most probable corrective pattern: sharp)
Nov. 2003 1 33
Dec. 2003 2 34
Jan. 2004 3 35
Wave (5) Down
Feb. 2004 4 36
Mar. 2004 5 37
Apr. 2004 6 38
May 2004 7 39
June 2004 8 40 K
It makes sense to consider the last month of a given wave and the first month of the next wave to be a transition period in which the Dow searches for a peak or trough before making a move in the opposite direction.
Now for the disclaimer: The above scenario is merely my best possible guess of how the Dow may move in a Grand Supercycle bear market based solely on the cycle patterns I provided in an earlier post and the most bearish Elliott Wave interpretation from this point forward using Robert Prechter's work. As even under the best of circumstances a given cycle may turn out to be up to 5 percent longer or shorter (in my experience) than its average duration, the above calendar obviously states a degree of precision not likely to be anywhere close to the actual case. And, of course, Prechter has been known to be early, so keep an eye on the outside K-Wave date that ends in early 2007. Finally, this entire analysis assumes the Dow reached its final peak in January of this year. If that turns out to be incorrect (as evidenced by a new high in the Dow occurring at any time after that), the above analysis will need to be revised based on the month of such later peak.
Given the very high odds that the above analysis will be off, you may wonder why I decided to spend the time to undertake this project and share it with you. My main reason is to make it clear to you in no uncertain terms that very powerful downward cycle forces are kicking in over the next few years and, with the prospect of a Grand Supercycle bear market also getting closer by the day, the combination could be quite lethal to those not prepared, whether by virtue of the positions in their investment portfolios or the risks taken in their personal lives (e.g., high debt levels, employed in a job that will not survive in a depression, etc.). There are also significant non-financial risks at play here, with the prospects of serious invasions of privacy and serious threats of physical violence becoming increasingly likely, especially during Cycle Wave C's decline, when final hopes are dashed.
Although as a long term trader, I call ?em the way I see ?em, as a humanist, I hope I'm wrong, especially as to the intensity and depth of the expected financial and economic decline. This country has never had a Supercycle degree decline without an economic depression. I hope people everywhere use this opportunity to reevaluate what's important to them, to see that, regardless of severely reduced job and financial prospects, they are and remain, as wealthy as ever.
Tommy Bear |
