Monday, May 18, 2009

After the fall

Orthodox Elliott Wave theory is suggesting a devastating decline to under 1,000 on the DJIA. Glenn Neely doesn't think so, although his forecast is for a 5,000 DJIA. The major difference between Neely's NEoWave forecast and orthodox Elliott is described by Neely in the following NEoWave, "Question of the Week" published December 10, 2008:



Question:

Many orthodox Elliott Wave analysts believe we are in a secular bear market and that the Dow Jones Industrial average will bottom near its 1920s bull market top (i.e., 400). Do you agree?


Answer:

For nearly 25 years my long-term stock market perspective has been at odds with that of orthodox Elliott Wave analysts. It began in mid/late 1987 when I turned very bearish on the Dow, expecting a 38% market decline in just three months off the high. Turns out, nearly 90% of that bear market occurred in 1 day (from top to bottom the bear market took less than 2 months), but it did produce a decline of the magnitude expected. Where I really began to diverge from the orthodox Elliott Wave camp was when I turned "wildly" bullish in mid/late 1988 (see CYCLES magazine, the Sep/Oct 1988 issue where I revealed my 73 year stock market forecast, complete with a prediction the 1987 stock market low would not be broken for the rest of my life and that the Dow would exceed 100,000 by the year 2060)! Not only had such a long-term and specific stock market forecast never been attempted before, but it is the ONLY forecast made in that era by anyone that is still coming true today and still has 50 years to go!

In the mid and late 1990's, while nearly every Elliott Wave analyst was bearish, I was calling for a powerful continuation of the advance. Finally, on September 5, 2000 (which under wave theory was the actual day the bear market began), I told my subscribers the bull market was over. I remained bearish on the Dow until early 2003, at which time I proclaimed the bear market was over and that a 5+ year bull market - pushing the Dow and S&P back above their 2000 highs - was underway. At the same time, nearly all orthodox Elliott Wave analysts were calling for a major stock market crash, a deflationary depression, social upheaval, possibly nuclear war, etc. Finally, in late 2007, for the first time in nearly my whole career, I and many orthodox Elliott Wave analysts were finally in agreement, calling for a major bear market and a retest or break of the 2002 low.

Sometime in 2009 or 2010, with the S&P around 500 and the Dow around 5,000, I will once again be a major odds with the orthodox Elliott Wave camp (and most likely the rest of the analytical world - just like in 1987) when I say the bear market has bottomed and that the 2009-2010 lows will not be broken for at least 50 years!

So, to answer your question, NO I do not agree with the scenario that the Dow will return to 400 or that the stock market will fall more than 90% off it highs. As I have said many times in the past, the wave count that produces that scenario is flawed and has been flawed for the last 25 years, which is why most Elliott Wave analysts keep getting the major market turns wrong. My logical, scientific NEoWave approach allows for more accurate, unemotional and objective wave counting that tends to be right a far greater number of times than is possible with orthodox Elliott Wave techniques.

16 comments:

Michael Lomker said...

His long entry overnight is looking rather brilliant at the moment. The guy is good...

Anonymous said...

So Allan, what is the worst case number you see for the DOW??

Anonymous said...

Hey, let me know when they make a decision and what it is. Post it HERE!

Anonymous said...

Michael, whose long entry do you mean?
-Alex K

Anonymous said...

I think he means Allan's long entry ...

all my shorts get hosed today ...

Anonymous said...

is the bear market rally over yet ???

violinbf said...

Allan, this is a non sequitur, but ADLS reached a high interday trade at 1.00 today. close at .90. That is almost 3X gain from my heads up at .33.


Watch what happens on June 2nd.

Michael Lomker said...

>Michael, whose long entry do you mean?

This post was about Glenn Neely's NEoWave trading service/newsletter. We went long at 876 on the overnight futures. That was about a point above the overnight low and we cleared 32 points by the close.

That's stellar performance. If you haven't subscribed to Neely's S&P trading service then you just don't like making money.

Allan said...

Neely does a very nice job of picking his spots. He can go weeks without a single trade, then when everything lines up, like today, he cleans up. Not a bad way to trade, no, not bad at all.

Allan said...

Re: ADLS

I'm bored with this one already, what's your next pick?

PENN STATE Eric said...

If you're bored with that, how about PPTO? High yesterday at 1.12 and record volume too.


And am I confused? Morgan Stanley, JP, and GS have to APPLY and ASK the Fed if they're allowed to return the $45 billion they borrowed.... Anyone else confused about this? I think there would be a resounding "YES, RETURN THE MONEY!", no application necessary.

Anonymous said...

The spammers are pushing UOMO.

LB

Anonymous said...

Allan, given that Neely's prediction was given in December, are the March lows "close enough" to perhaps say we've (or he's) seen the lows?

Or is 5000 still on the table...do you know?

Mike

in the mountains said...

Hi Allan,

Great post, thanks for sharing this info.

Question: It seems that Neely and Prechter would differ in their forecasts. If you subscribe to Neely's forecasts, why do you also subscribe to EWI?

Thanks in advance for your answer!

Allan said...

Re: Neely and Precther

Both are expecting fireworks to the downside, sooner rather then later. I find their respective analysis complimentary and learn much from the differences inherent in their analysis and trading perspectives.It's convenient to refer them as EW analysts, but the truth is that they provide their own proprietary techniques that reach completely independent forecasts. The likelihood that they both will miss the coming decline anticipated sharp declines, is infinitely small.

in the mountains said...

thanks, Allan.

All the best to you.