A lot of people like to criticize those of us who attempt to give warnings about what the future may hold with regards to the markets and economy. I know I speak with experience in this as I was ridiculed in late 2007 for stating a new bear market was upon us. And again when I called the rally in the Spring of 2008 a ‘bear market rally’, that would end with further downward moves in the market.
Throughout the bear market rally which began in March of 2009 a few of us market technicians continued to warn that this was not the start of a new bull market, but instead it was another ‘bear market rally’ that would end, and end in a blaze.
Some recent comments in the mainstream media would have people think that we are now ending the bull market from 2009 and are now entering into a new bear market. I say the bear market that began in late 2007 never ended at all, which long time readers here already know. Within all bear markets there all rallies contained within the bigger bear market environment. One of the most notable aspects of bear market rallies is that when they end they usually do it in a big way, as was the case in 2008 and again here at the present time.
A popular myth in the market is that when prices drop over 10% it is a correction, but when prices drop more than 20% it is then a bear market. I don’t subscribe to the 10% and 20% number theory for determining a correction or bear market, but if we were to apply them to our current market then the S&P 500 is still in a bear market when measured from the October 2007 peak as it is currently down 32% from that October high. So in this regard we never left the bear market at all.
When I first met Bob Prechter, an avid Elliott Wave technician it was at a time when I still had a full mop of hair on my head so that should tell you it was a while ago. Back in the mid 90′s when I stumbled into Bob at a conference I was intrigued by his forward looking thinking. Any analyst can look great when the market is going up because they are simply playing the ‘field of greed‘ in that people always want to be told good news. But when you tell them bad news they dismiss it because it goes against the human psychology of always wanting everything to be rosy. I wrote an article on this very subject back in 2008 and when I dig it up I’ll come back and put a link to it here.
Anyway back to Bob Prechter. Bob has had his share of ridicule in the past because he warned of potential events before they happened. Again, no one likes to hear bad news when things ‘appear‘ to be great as reflected in stock prices. The one thing I remember the most from my conversation with Bob, back when I had hair, was to never adjust your analysis based solely on what others say your analysis should be. If you are going to be a market analyst/technician be your own. The only thing that should change your analysis is your own readings on the market and economy.
This is why in May of 2007 I came up with the name “Rebel” for my site. Rebel in the sense that I was a cast off from the mainstream media who at the time was saying everything was great while I was arguing that it was anything but great. In 2007 I and some others were alone in a world full of bulls who kept saying that the markets were going to scream higher for years to come. When I stated in November of that year that a new bear market was upon us I was still mostly alone, but I did not change my analysis simply because others said I should.
Being a Rebel does not mean being defiant, it means being free to think for oneself.
There are many kinds of market analysts, you see them everyday on CNBC. Many simply waffle back and forth in order to be in the ‘favored’ camp at the moment just to look good. Others are there to simply talk their own book as the old saying goes, and last are those who attempt to layout a picture of what may be coming based on their own research. And it is this last category of analysts that are usually the most ridiculed. Remember, it is human nature to only want good news, it is how we are programmed from birth.
So with all of that I offer an interview that Susan at Elliott Wave International emailed to me, this originally aired on the Yahoo Finance Ticker.
Prechter on Yahoo! Finance: “Even $1 Trillion Can’t Save the Euro, But Gold is No Safe Haven”
The euro’s recent loss has been the dollar’s gain, which means that it’s not the best time to buy the U.S. dollar. Meanwhile, the most popular alternative to currencies, gold, isn’t such a good buy either. Watch the second excerpt from Robert Prechter’s May 20 interview with Yahoo! Finance Tech Ticker host Aaron Task to hear what Prechter thinks is in store for the U.S. currency and gold.
For more information from Robert Prechter, download a FREE 10-page issue of the Elliott Wave Theorist. It challenges current recovery hype with hard facts, independent analysis, and insightful charts. You’ll find out why the worst is NOT over and what you can do to safeguard your financial future. Hurry! This free offer expires June 7.
