Thursday, October 09, 2008

Are we there yet?

Are we there yet?

The DJIA has dropped 2700 points from my September 10 Crash Warning;

It has dropped 2400 points from Into The Abyss;

It fell 2000 points from Wave 3 of 3 of 3 Down;

And 1400 points in the four trading days since Sunday Night Observations.

What now?

The market has fallen about 25% since all these blogs of mine started, about the same percentage as the "Crash" of 1987. Enough to qualify as a Crash?

Yes, by past standards. But this time it's different.

In Elliott Wave terms, this bear market is a generation higher, one larger fractal higher then the 1987 crash. As such, we should expect this crash to be commensurately larger.

How large?

Don't know. But by the way the market has so effortlessly rejected rallies on the way down, especially this week, I am guessing we have further to go then anyone imagines. That doesn't mean there won't be rallies before the final washout lows are seen. But human psychology being what it is, I suspect those final washout lows will occur at about the time that no one cares anymore.

Not much of a road map. But probably better then all those archaic sentiment readings and oversold oscillators left over from the bull markets from whence they came. This time IS different and a new way of looking at the stock market is being born of these miserable times.

Miserable, that is, only if you are Long.



Anonymous said...

looks like we are getting closer to the BIG drop sooner than expected!! Can it go as low as 5000 (DJI)?? If it does...then the next question would be...will it rally up as eliot says or just ripple along the bottom for a while (similar to a bathtub bottom!)...while the market participants deleverages from 20 times to even.

A said...

5000 could very well be a way-station on the path to the ultimate low. A study of Prechter's wave theory suggests a break below DJI 1000 before this is over. Preposterous? Less so every day.


Unknown said...

Allan,Prechter's record is dubious at best.He was bearish in the mid 90s,missing the huge move in tech.I also think he has been predicting a crash for years.I remain a skeptic in Elliott Wave.
Ron Rascati

A said...


Prechter's decision to sit out the 1990's in cash is now looking pretty damn good, as that portfolio is way ahead of any other market methodology for the past 20 years. His book, Conquer the Crash, written in 2002, has nailed just about every aspect of the boom and bust of our financial system. The markets are resurrecting Wave Theory as a prescient analysis paradigm for our time. By the time all this nastiness is over, there will no longer be an doubt as to the credibility of Wave Theory, nor of Robert Precther, it's most notorious proponent.