About The Market
The market action since April 6th looks very much like a small scale copy of the market action from August '97 to January '98. Fractals anyone?
Looks like we're gonna have one more leg up before the Millennium Crash. The last run up should take between three to six weeks, topping around Dow 9800.
(See my previous prediction: siliconinvestor.com
Then we'll start on the long and winding road down.
There is very little doubt in my mind that this is one of the biggest bubbles ever.
Look at European stock markets- up x2 to x3 their levels three years ago- yardeni.com.
Pay attention to the Italian and Spanish markets-
those two look like they've already spiked, unlike France and England which remain near their highs.
The Anatomy of The Bear
I believe that the downward action will be quicker then 1929, and so will the rebound.
The first milestone on the way down will be breaking 200 DMA (which will be very close to the main trendline at around Dow 8300, see the-privateer.com
A weak reaction of a few days length and few hundred Dow points
will follow, and then fear will drive investors out of the market, and the Dow will plunge to the next support level, around 5800.
A big recovery will take the market to around 7000 in a two - three months time, and the the real bear will commence, carrying the market much lower, 4000, 3000, 1200? Donno, but it would be the greatest bear since the South Sea Bubble.
The weight of the equity market in the economy, as measured by the ratio between total market cap and the GDP, but also by assessing the role of the stock market in the economy (IPO money, wealth factor, options programs)
point that this bubble is greater then '29.
Participation of the public in the market is unprecedented, and so is mf low cash level.
Stock buyback programs have lowered book value and cash
levels of large companies to a small fraction of their market cap.
This will make them vulnerable when their earnings will drop.
I believe that a reverse of the trend will trigger a worldwide depression.
The millennium bug fear/panic will also help prevent any development of a bull market till the next millennium, and by then we'll already be deep in the depression.
The big moves I see are 9800-5800, 5800-7000, 7000-4000, 4000-5000, 5000-?
ATG |
