Bob Prechter: Bear Market Rally Is Over, Stocks Headed For New Lows

With the Dow Jones Industrial Average once again marching closer to 10,000, many investors, especially those who missed the rally since March, must be asking themselves: Is now the time to finally pull the trigger?

Robert Prechter, founder of Elliott Wave International, implores retail investors stay away… for now. Prechter, who was bullish near the lows in March, now says the stock market "is in a topping area."

Why?

Several factors:

- Slowdown in upside momentum. Recent intraday rallies are petering out before the close.
- Bullish Sentiment. Investors who were bearish near the lows, are now just as bullish after a 60% run in the S&P 500. To Prechter, "that's a dangerous place to be."
- General overvaluation of stocks.

Prechter, the author of Conquer the Crash, says this is akin to the market in 1966-74 or 1929-32, where massive bear rallies gave way to another "big leg down."

He's predicting another crash in 2010 that will bring stocks below this year's low. His word to the wise, "be patient, don't rush it" keep your money in cash and cash equivalents for now and wait out this bear market.

He thinks it'll be another 5 or so years before we turn the corner but the good news is when we do, it'll be the buying opportunity of a lifetime.

Currency Trader Magazine (Nov 2009)

The Nov issue of Currency Trader Magazine is out. Click here to download.

Get a FreeWeek of Robert Prechter's Forecasts

Eight months ago, the stock market began a very large rally -- the gains exceeded 60% in the S&P 500. Everyone knows this. But here's a fact that has gone virtually unreported: The vast majority of those gains (about 90%) were from March through August. By comparison, September and October were sluggish.

Yet the past two months have been the very time when the financial press has been the loudest about "green shoots," "recovery" and "new bull market." So the question is WHY -- why so much enthusiasm, even as the evidence literally fades away?

No one asks questions like this, never mind provides the answers. The one exception is Bob Prechter. And if most investors suddenly DID learn the details of his answer... well, the information would buckle their knees.

Prechter does of course provide a detailed answer in his current Elliott Wave Theorist. The latest Elliott Wave Financial Forecast expands on that answer. You can read both award-winning monthly market letters right now for free!

But let me be clear: The answer is in fact a forecast. What Prechter says is bigger and more important than these two publications. It could prove to be the most important forecast he has offered since the financial debacle began.

This moment -- today -- is the time to put yourself on the path to safety. You can now download Prechter's latest monthly market letter, The Elliott Wave Theorist, and its sister publication, The Elliott Wave Financial Forecast -- for free. Together, they provide critical analysis for the Dow, Nasdaq, S&P, gold, silver, bonds, U.S. dollar, the economy and more.

This amazing opportunity runs for a full week. It ends Wednesday, Nov. 11.

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Here's a sneak peak inside these two timely issues.

October 2009 Theorist What's Inside?

• 14 eye-opening charts across 10 analysis-packed pages
  for today's most critical markets: U.S. stocks, gold and
  the U.S. dollar.


• One chart you will NOT see elsewhere: It depicts a beautiful -- and telling -- fractal form
  in the past two years of market action.


• Mounting evidence from trusted technical indicators: sentiment, advance/decline ratio and volume.


• A decennial pattern in U.S. stocks that's held true for 10 of the past 11 decades.


• An informative and useful section titled "Devising Trading Strategies."


• Two and a half pages of gold analysis -- why lessons from the past likely provide ironies for the future.


• Poignant analysis for the U.S. dollar.

November 2009 Financial Forecast What's Inside?

Special Section: The November Financial Forecast includes an eye-opening special section on Goldman Sachs. These new insights about one of Wall Street's most storied firms have broad implications for Wall Street as a whole. You will see a picture of Goldman's history plotted along a 100-year chart of the Dow. You will also learn how the same sentiment driving the market
today will drive the course of mega-deal makers in the future. This is a can't-miss special section.

Plus, you will get:

A thorough Elliott wave perspective on the stock market today -- what does Elliott tell us about the current juncture?

• A telling bar pattern candlestick aficionados will recognize.


• Valuable momentum considerations, including powerful evidence from a technical analysis method that tracks the distribution of stock from strong hands to weak.


• A chart of dollar trading volume vs. GDP and the important analysis about it that you should see now.


• And much more.

What's more, these are just two of the incredible free resources you get during this week only. You will also have completely free access to the most recent Theorist and Financial Forecast archives (September and October issues for each publication are currently available.) as well as the tri-weekly Short Term Update, which is designed to keep EWI's subscribers up to date between the monthly issues above.

Please don't delay. This special, limited-time offer from EWI is one of the most valuable free offers we've ever written to you about. It expires Nov. 11. Please follow the link below; sign up to join FreeWeek for free; print out your free reports; read them at your leisure. Do not miss this exciting opportunity.

Learn more about FreeWeek, and download your free reports here.

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About the Publisher, Elliott Wave International

Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private around
the world.

FREE Webinar Hosted by Adrienne Toghraie, Trader's Coach

There's an upcoming free webinar that you folks may be interested in. Cheers!

Presenting
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November 3 - Tuesday - 4:30 pm EST
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FX Education Videos by Bloomberg

I just realised that Bloomberg has some educational videos for FX! I'm either really slow to notice it, or it is a new resource put up by bloomberg. In either case, I've added the link to the videos on the side panel "Forex Resources". Enjoy!

Has the S&P Index Topped Out for the Year?

Firstly, sorry for being MIA for such a long time. There had been quite a few changes for me this period so I had to take some time off. In a nutshell, I had recently changed jobs and time to adapt, and my computer crashed, so I needed to reinstall everything, retrieve all my data..etc. Well, you know how its like I'm sure.

Now, lets get back to the subject title. It appears that the markets had been rallying quite furiously the past few months, but market sentiments aren't exactly congruent. In Asia, employment seems to be picking up, but many in US are still asking themselves where the jobs are. In the article "Where are the @#$ Jobs?" by CNN, the writer mentioned that "There is no strong recovery without job growth" and that "there still doesn't appear to be much evidence of an improvement in the labor markets coming anytime soon".

Recent earnings reports, however, seem to be rather positive, with tech companies and even banks appearing to be doing well. Other reports though also mention that while big banks are surviving the crisis well now, its the small banks that have yet to climb out of the hole.

In this backdrop, perhaps the rally in the markets was somewhat too... exuberant? Here's a technical view by INO in their video "Has the S&P Index Topped Out for the Year?" Notice the long term trend lines. And even though they did not mention it (that or I missed it), notice the MACD divergence on the charts. With a trend line break downwards, S&P is likely headed for a further drop until the next support line.

Enjoy the video!

Testing iPhone app

Testing iPhone app. Expect more posts if it works!


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