Thursday, September 24, 2015

The Big Bear

Here comes the bear market and it's a Griz. Really?
 Most define a bear mkt as a 20% decline lasting 2 mo.s or more. I believe the Dow is leading the way (see OH OH Equities from Aug.12, and Monday Morning Indu Blues from July 27)  
and that will continue as it breaches the -20% mark at 14,680. Not that much below the Aug.24 low of 15,370.

click to enlarge
 
And of course, whether counting the high from May 19 or July 20, it's been 2 months.
So the naming of the bear is coming up fast and it will likely be accompanied by the "moment of recognition".
 You might think that the 'moment"was in late Aug. but I believe most are hoping that was an anomaly to do with China and thin August markets. Head in the sand, relying on the Fed to fix it, averaging down.

The case for why NOT to average down, and why getting liquid is crucial.

The high of 2015 was the end of a Elliott Grand Super Cycle Bull that lasted 119 years.
That Elliott count is explained in the April 2 post The Equities Problem .

In it I close with,  "Of course once the 5th of a 5th is complete, whether 2120 or 2300 , the ensuing collapse will be dramatic and sustained. A retreat to the previous 2009 lows would represent a much more significant pull back than seen before both in terms of percent and real dollars, and pullbacks to the 4th wave of lesser degree are quite common. "

Thats ASSUMING the 4th of a lesser degree is 6600, it could well be  600 from 1974.


 

Note the time the corrections take relative to the preceding bull of similar degree.
Roughly 35%...or 41 years in the case of a 119 year run up.

Whats a potential worst case scenario: pullback to 4th of lesser degree at 600 Dow, and lasting decades. That s why getting liquid is crucial.



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