Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Dow 4000! -- Ignore unavailable to you. Want to Upgrade?

To: Brinks who wrote (18)	8/17/1998 5:08:00 PM
From: Brinks	Read Replies (1) \| Respond to of 140

MARKET DIRECTIONS: Expert sees Dow declining to triple digit By Rick Ackerman ÿSunday, August 16, 1998 ---------------------------------------------------------------------- EXACTLY 16 years ago, with the Dow Jones industrial average wallowing in the doldrums near 800, market theorist Robert S. Prechter tweaked Wall Street's imagination with his prediction that the most spectacular bull market in history was about to begin. And so it did, right on schedule, with a seismic lurch in mid-August 1982 that forever etched itself into the memory of anyone who was working in the trading pits, as I was. In the decade that followed, with the Dow ratcheting inexorably toward Prechter's once seemingly unattainable target of 3,600, his influence and fame became legend. But the Gainesville, Ga., guru's celebrity turned to notoriety after the target was reached in 1993 and he waxed increasingly bearish over the next several years. His 1996 book, "At the Crest of the Tidal Wave," forecast global deflation and depression just when the bull market was shifting into high gear. Lately, though, stock averages have faltered alarmingly with some stunning one-day drops, and the economy has begun to slow. Could the bull market finally be over? We asked Prechter, who prognosticates for his company, Elliott Wave International, whose answer was unequivocal. Q: Are we in a bear market now? A: Absolutely. The evidence is so overwhelming that I would be shocked if we haven't seen the all-time high. Q: What are the signs? A: The most important is that, from April to June, secondary stocks completed a decline of five waves just before the blue chips hit new highs. Q: That's what technical analysts call a bearish non-confirmation, right? A: That's right. When one sector continues in an old trend while another holds back, it is a sign that the old trend may be tiring. Q: What else? A: The last important high occurred on Friday, July 17. July 18 marked the date on which the duration of the advance (in the Standard & Poor 500 Index) from the bear market low in October 1974 precisely matched the number of days from the bear market bottom in 1942 to the bull market top in 1966. Q: So a major bullish cycle is ending? A: Yes, a very major cycle. It's the same size as the one associated with the South Sea Bubble in 1720. (The South Sea Bubble refers to a historic stock market crash that sent London markets tumbling after speculation in government-chartered trading companies artificially inflated equity prices.) When it ended, the average stock dropped 98.5 percent, if you factor in companies that went out of business. It took 100 years for the stock market to get back to where it was before the South Sea Bubble collapsed.