Mainstream media is trying to rationalize the stock market decline tying it to the economic woes, news and events. But have not have these problems for some years now? Why rally for years on the same news and then suddenly turn south losing 500 points a day every other day? Could the reason fo market decline be something else? Something subtle yet obvious to the alert eyes? Something that mainstream media does not want to say? In the May 2008 issue of his monthly Elliott Wave Theorist, Robert Prechter showed this chart of the Dow Jones Industrials. As you can see, prices go back to the 1970s.
Please note that on the day this chart published (May 16), the Dow closed at 12,987 — barely eight percent below the Dow’s all-time high of the previous October.
Yet, as you can also clearly see, Prechter labeled the white space below the May 2008 price level as “Free Fall Territory.”
At the time, no one else dared to publish such a bearish forecast. This was before the Lehman bankruptcy, the bailout binge, the home foreclosure crisis, and certainly before the worst of the stock market collapse.
In his June 2011 Theorist, Prechter published an update to the chart above, and here’s the major difference: The updated chart “telescopes out” by one full degree of trend. Prices go back to the 1930s. The scale of the white space surrounding this chart’s “free fall territory” label will show you what Prechter truly means.
His commentary in that issue also observed that
“the March-April  rally was one of the most passionate bouts of stock buying I have ever witnessed.”
Bob Prechter made this observation not in admiration, but as a warning.
In the past three weeks, the Dow Industrials have plummeted nearly 2,000 points. Most investors are confused and scared. How far down will the decline travel? Will it end tomorrow or go on for years?
The answers to these questions are crucial to your financial health. You can still get ahead of the trend, but only if you prepare now. Read EWI’s long and near-term forecast. Get it in one comprehensive package — and stay ahead of the crowd.
And — get Bob Prechter’s August Elliott Wave Theorist. It includes “many dozens” of charts. Bob will also record this Theorist as a rare “video issue” — you’ll be able to watch and listen as Prechter himself presents all the content.
Also — as part of the same package, you get the August issue of our Elliott Wave Financial Forecast — you’ll see and read about the latest big picture in stocks, dollar, gold and more.
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The Dow has plummeted over 2000 points in the past weeks and it seems like volatility is here to stay.
Yet, market volatility doesn’t have to bring confusion and fear when you’re prepared with the necessary market analysis. For example, here’s what Robert Prechter had to say about market volatility in his May 2009 Elliott Wave Theorist market letter:
Market volatility makes most investors less certain about market trends. Elliott waves, however, become clearer the more intense the market’s behavior.
When social mood is changing dramatically, non-mood-related short-term noise has a minimal impact, so even waves of small degree adhere more closely to textbook forms. The five-wave decline from October 2007 to March 2009 was quite beautiful, as were most of its sub-waves.
It is an ironic aspect of wave application that when others are more confused wave analysts tend to be less so.
Get a glimpse into Robert Prechter’s current outlook on these volatile markets when you read his recently released FREE report. It includes an 84-year study of stock values that will help you understand and prepare for today’s critical market juncture.
But hurry, this report is only available until August 22.