Wikinvest Wire

Prechter calls for a crash ... again

Thursday, January 21, 2010

Elliott Wave theorist Robert Prechter is back in the news today via this report by Peter Brimelow at MarketWatch in which he is once again calling for equity markets to crash. At the moment, that looks to be a pretty astute call.

Crash of 2008 winner says bear market is back
Proponents of a weird investment theory say another crash is coming. Even weirder: they were right last time.
EWFF was one of the first letters to call for a stock market rebound. (See March 4, 2009 column.) In mid-summer, it argued that the Dow could reach 10,000 -- but that the bear market would then resume, ending in devastating deflation. (See June 29, 2009 column.)

Well, the Dow did reach 10,000. What now?
It says: "2010 is the year when the bear market in stocks returns in full force." It compares the situation to the short-lived rebound after the initial break in 1929, and says that "a meaningful close" below 10,489 should see a similar collapse to new bear market lows.

EWFF also expects the spread between high and low-grade bonds to experience "a record widening" and thinks gold will fall "below $680."
As this is written, the Dow Jones Industrial Average stands at 10,398 - Yikes!

If not for his prediction years ago that gold would never top $400 and for what Brimelow calls Elliott Wave's "complex cycle theory -- which, however, is subject to readjustments and reinterpretation", it would be a lot easier to put some money where Bob's mouth is.

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Anonymous said...

Just went from 43% gold to 25% gold (rest cash)...

I think the risk for massive deflation is on the rise since it seems the free money/bailout party may be coming to a close.

Tim said...

So, you think they'll just let the party end? What do they do then? Just watch everything collapse and see people suffer during an election year?

Anonymous said...

I voted for Obama and "change".
I am greatly disappointed, as the only "change" has been massive bailouts for bankers and Wall Street.
You can expect another stimulus package, as the Dems try to avoid a blood bath in November. Dems will probably loose big time, and Obama increasingly looks like a one term wonder. Like Jimmy Carter, he is personally well liked, but like Carter, he is incompetent as President.

NC 2005 said...

I don' know what to believe anymore. I also voted for Obama for "change", but I don't see any changes. The same old crowd (Tim and Larry) is still in the white house making a big mess by helping the bankers and not the little guy like me. Real disappointed....

Anonymous said...

(1) They cannot stop QE, guaranteed. The way this country spends, who is going to buy the treasury issue if not the Fed? Interest rates will go higher but not for lack of QE.

(2) If you really want change, you should never trust Washington to get it done for you. Next time, vote for someone (Dem, Rep, Indy, it doesn't matter which) to stop spending on the war and empire (this only benefits a small elite), cut taxes (give the power back) and cut programs (diy). THe way out is to take back power and responsibility to a local level where it can be held directly accountable.

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