Yes, this will happen.
Problem is, the more I peer into the market the more I fear It'll rebound from SPX 815 to new highs. At first I thought 85-15 against, now I think it's 70-30 against. The reason I say fear is IMO a continuous bear today can result in a medium recession, while the millennium crash (B scenario) can lead to a great big depression, with all the global political implications linked.
'73-'74 bear was initiated by the exogenic oil/middle east crisis.
Not relevant to today's market (yet. maybe Bob's El Nino?) . Also crashes of immature markets (Taiwan, latin america, Israel) are not comparable.
Nikkey 90s and '29 crash are best comparisons. Both came out of the woodwork in a seemingly goldilocks mature economy (a bubble). I think these two represent the choices the market faces- prolonged bear and stagnation, or a BIG crash and all hell breaks loose, Nostradamus' (the real, dead one) style.
Luckily, unlike Japan, in the US the real estate bubble, savings and loans crash and stock market bubble did not phase in to form a big bubble. The Fed and government will act decisively once bear is clearly under way. There is still hope. Hope that the public will not go crazy and increase the flow to mutual funds after 10-15% "correction". Hope that this would be a peacfull bear and not Godzila roaming down wall st.
This hope has a grasp in reality- the small caps have already made their run last year, and the NASDAQ fashionable coms or CUBEs have already taken their hit. So the blue chips are one of the few sectors left unharmed (alright, boxmakers, banks and drugs are gonna get it, too).
The segmentation of the market can help it pull through this one, but only if the public retains a shred of rationality in the months ahead.
Counting on human mass behavior is usually 90-10 against, but one can hope.
Arik
BTW add MRK IP JNJ to the down trend list, and the biggest has been EK, getting ready for another leapfrog (third and last for the time being) backwards.
I'm ashamed of not shorting EK in the past, but it's not too late.
Arik. |
