Another Down Leg For U.S. Stocks SoonIS ANOTHER DOWN LEG COMING FOR STOCKS?
There seems to be two camps following the stock market….
A) U.S. General equities will rise into the Spring months and then start a ‘C’ wave Down persisting for many months. Some of the people are looking for a slow motion replay of the stock market decline of 1929 - 1932.
B) Then there may be another frame of thought - looking for a Major decline with five waves down.
Wave theory of a major top matching economic fundamentals suggests ‘B’ is the greater possibility. There’s about twelve indicators measuring Sentiment & Momentum that have tracked the stock market decline accurately since the start of the Bear in October 2007.
Right now, we’ve have a good unwinding of the ‘Oversold Condition’. It appears similar to the temporary counter trend rally from about mid July to late August on the S & P 500. Then it rolled over into a dramatic decline that was probably the ‘Third Wave Of The Third Wave’. What appears to be coming up shortly is the Fifth And Final Wave Of The Third Wave.
Most of these indicators are approaching a position at the start of the September / October / November decline. One or two have turned already, but it’s seems a bit early. The stock market should struggle near these levels for a couple of weeks. By the end of the first full week of January it should be clear that the trend is turning down again, gaining strength through the inauguration and beyond. It appears that there will be a rollover from here.
An interim bottom should be reached in March. Then we prepare for the fifth and final wave down. Maybe it will all end sometime in the third quarter, perhaps toward October. There’s a chart point on the D.J.I.A. in 1993 (3,700 - 4,000). It’s a logical target because the D.J.I.A. wouldn’t be worth more than 25 cents or so on the Dollar from the very peak at 14,167, in my opinion.
Short something? Everything is so bashed down. Gold stocks? My thought is that the Majors have entered a Primary Third Wave Up, and there should be a pullback leading to a stronger uptrend perhaps starting in March.
Merry Christmas, Happy Holidays
SGGroup