Thursday, July 02, 2009
Peter Brimelow at MarketWatch comments on the latest prognostications from the group of perma-deflationists over at Elliott Wave International.
The good news: One successful survivor of the Crash of 2008 thinks the bear-market rally has further to go. The bad news: It's still a bear market, and it will end in devastating deflation.Like many others, Elliott Wave Theory has always been bewildering to me, but that may have something to do with the fact that I have a degree in engineering and worked as a hardware/software designer for more than twenty years.
Elliott Wave Theory can be bewilderingly complex. One reason it tends to leave investors incensed is that they believe EWFF's overlapping waves constitute a sort of bait-and-switch, always leaving the forecaster with an out.
Right now, for example, EWFF is showing what it calls the "intermediate" trend as down. But the somewhat longer "primary" trend, which began in March, is intact and is projected to reach 9,000-10,000 on the Dow.
EWFF writes: "The probabilities favor a second phase of advance that carries the rally off the March lows to new recovery highs later."
For the record, EWFF also shows a "grand supercycle," beginning in January 2000 and ending at 400. Yes, that was FOUR HUNDRED.
Absent that background, maybe it would make a whole lot more sense...
Here's a simplified version of the five waves.
Don't ask me to explain it but, from my limited exposure to it, there always seems to be a debate between wave 3 and wave 5. There's more from Wikipedia here.