I will be speaking about the markets referencing Elliott Wave theory. You can find a graphic of an idealized Elliott Wave here Just flip it upside down for a bear market.
About a month and a half ago I began to believe that everything which has happened since November was a Wave IV, meaning that we still have Wave V down before we get a monster rally in the late Fall.
I was a bit bothered that I was the only one who seemed to have this particular count. Now I know I'm not alone. The following is an excerpt from today's posting by George Ure at UrbanSurvival.com. Once again, I don't think Ure is a genius or anything. Sometimes he's downright weird. But Robin Landry is someone I pay attention to:
To get to the point this morning: I had a call on Thursday afternoon from a very, very worried Robin Landry, who was returning my call from earlier.
"George, you were asking about the short-term outlook? It's bad...really bad. Things that should not be happening in the market have been happening the past couple of sessions."
For instance, the Dow has been coming down, but at the same time, treasuries have been dropping, too, gold has been going up, and oil has been climbing.
So there's a possibility...and it's only a possibility that the market could go straight down from here..."
Now, Landry's worried that based on his market modeling that he's been using for nearly 30 years - and which has been good enough that as a one-man money manager he's driving 9-digits around the markets from his office up in Shawnee, Oklahoma - because of the way various wave counts are stacking up along with technical indicators.
"Robin, the way I've been hoping this would work out is that we'd still work up to the Dow 9,600 level, such that the decline from the October 2007 high (14,198 and change) would be the all-time high, which would make last year's 6,626 low the larger Wave 1 down, and that we'd last until mid-August of this year before we crash to your long term Dow 770 target in the 2010-2011 timeframe...."
"Well, that's been Bob Prechter's count too. My work says we're in a five wave decline and this week we finished four. As you know, crashed happen in the 5th waves down so if we take out 7,800 on the Dow in the next week, or so, then Katy bar the door...."
We then played with numbers for a few minutes.
Ultimate downside risk? Dow 770 (Landry) or 1,020 (mine). But, Landry's got interim targets in the Dow 4,400 area first which we'll get to in a minute.
The next best Elliott count is that we finished 5 intermediate-degree waves down in March and are currently in the midst of some variation of the three-wave correction that always results after that.
If we finished Wave IV last week, then the rally is over and we should head down through the summer and into the fall and make substantial new lows. From there we will see a powerful multi-month rally.
If we've finished five waves down and everything since March is a three-wave correction, then we will head lower for the next few days to weeks, possibly retesting the March lows and then rocket up to 9500 or so. It's possible for it to go even higher than that. A larger Wave II correction can retrace up to 100% of the previous decline, though it cannot go higher than the peak. In that case, we are in the midst of the aforementioned powerful multi-month rally, which should last through a good part of the summer before we turn south and head to new lows this fall.
We are still in the beginning stages of a depression. Do not listen to the officials who are saying that the bottom has been reached and happy days are just around the corner. They are not and they will not be for years. I've said before and will say again. The markets crashed in October of 1929. By March of 1930 they had retraced 50% of their losses, and important people were saying that the hard times were over and recovery was just around the corner. That talk lasted until about July of 1930. The Dow didn't bottom until 1933, after losing 90% of its former value. It did not reach 1929 levels again until the mid 1950's.
Stay the course. Do not make foolish, long-term decisions like debt encumbrance. Save money. Pay down debt. Cut expenses. Live frugally. If you're a two-income family, live on one income and save the other. My wife and I did this from the late 1990's on, and when it was time for us to go to one income, we were debt free and were able to live on less than half of what we had made before. You could very well be going involuntarily to one income in the near future.