SARS- - -Sell All Remaining Stocks!From gold-eagle.com:
SARS: Sell All Remaining Stocks!
STOCKS ON FULL CRASH ALERT
"Grizzly"
"By now, the experts thought, the stock market would be soaring."
So read the opening sentence of the headline story in yesterday's (04/13) Wall Street Journal Sunday edition. Don't you just love all those media-appointed "experts"? As contrarians, we do love 'em. Whenever they reach an overwhelming consensus, the odds are very high that they're very wrong.
Peter Eliades (www.stockmarketcycles.com) is one of the few true market experts out there, and he is unequivocally bearish. Forbes magazine interviewed Peter in their April 10th edition. Here's an excerpt from the article:
"This war rally was just a release of emotional pressure," he says. "People remembered 1991 and think the war is going to turn everything bright and rosy again. Well, this is the complete polar opposite of 1991.
Well stated, Peter! We can't republish the entire article here, so we urge you take a few minutes and read it at the Forbes web site.
We'll spare you, and not discuss our views on the war in Iraq. Whether we're at the end of the beginning or the beginning of the end, suffice it to say that whatever happens next, it will be anti-climactic if not outright negative. Every possible positive scenario has already been priced into the markets. Can you think of anything "unexpected" that would be a positive for the markets? We'll simply concur with Peter Eliades' perspective and move on to crux of the matter, the state of the markets.
In Elliott Wave terms, wave counts don't get much clearer than the current position, and they don't get much more bearish. In the DJIA, a series of five or even six smaller and smaller degree waves 1-2 have traced out from the January 2000 all-time high. The next move is very likely to be a crushing series of larger and larger "third of a third (of a third...) waves" to the downside.
A break of the April 1st lows (7,525) should confirm that the next leg of the decline is underway.
As of today we are reinstating our FULL CRASH ALERT status. This is our financial equivalent of the Homeland Security Department's terrorism threat level of Orange, one step below Red, a FULL CRASH WARNING. We believe all the conditions and prerequisites are in place for a crash of historic proportion to happen at any time.
To be clear, the purpose of our Crash Alert is not to frighten or intimidate. We feel obligated to bring to the table this potentially very serious situation that you'll never hear discussed on CNBC. We want everyone to be aware of the extreme risk at this juncture so you may take whatever steps you may feel necessary. We believe the preponderance of technical and historical evidence strongly suggests that a crash of historic proportion is in the making, now. We'll keep you posted as the waves unfold over the coming weeks.
This short-term outlook is in sync with our longer range forecast, as detailed in the January Special Report 2003: The "Great Bear Market of 2000-200[?]" Continues.
This month's "I majored in the Bloody Obvious" award goes to Greg Jensen, of money management firm Bridgewater Associates. Sunday's Wall Street Journal quotes Mr. Jensen as saying "There is increasing evidence that the economy is not responding to Federal Reserve stimulation in the typical way." Come on Greg, the evidence has been there for over two years, as chronicled in these pages and elsewhere.
For two years, the U.S. economic engine has been stuck in neutral, if you believe the official government statistics. It's been in reverse if you believe the anecdotes of your friends, neighbors, and (now former) co-workers. Remember that old axiom: "When your brother-in-law is unemployed, it's a recession. When you're unemployed, it's a depression."
That mythical and mystical "second half recovery," the perennial savior of the economy envisioned by the vast mainstream of bullish economic anal-ysts, is degenerating further (yet again) into the wishful thinking category. The U.S. economy lost another 108,000 jobs in the latest reporting period. The mainstream continues to lead you to believe "the recovery will start next month. No, wait a minute, I mean next quarter... No, wait a minute..." What do you think?
Pardon the pun, but SARS is nothing to sneeze at. This pneumonia-like disease is just starting to spread around the world. On Saturday the World Health Organization reported the outbreak has reached into Indonesia and the Philippines. Asian airline giant Cathay Pacific has suspended flights to/from Malaysia, and they're considering suspending all flights. Airport authorities in Hong Kong are taking the temperature of outgoing travelers and detaining those with even the mildest symptoms. (If there's one market to go long on, it's surgical mask futures.)
SARS is already taking a measurable economic toll. Travel and tourism in and out of Asia is down dramatically. Las Vegas has barred some incoming flights from Singapore and Japan. Many Asian high-rollers, a mainstay of the "action" in Vegas, won't be coming this summer. This will ripple right on down to the nickel slot machines.
Japanese investors continue to spread SARS, in this case "Sell All Remaining Stocks." The Nikkei 225 index closed last Friday at a fresh 20-year low, at 7,825. Despite the near-desperation actions of the Bank of Japan (near-zero interest rates) and those by the Japanese government (numerous "emergency stimulus packages") over the past ten years, their economy is still in the intensive care ward. The prognosis remains: little prospect for immediate and substantial recovery. For example, retail sales in Japan have dropped an incredible 51 months in a row! (They're going for DiMaggio's record of 56.)
Here at www.bearmarketcentral.com, we've come up with our own new economic indicator, the BUsiness Magazine Price Index, the "BUMP". This is our unscientific, unofficial survey of the state of the financial publishing industry, as a proxy for the economy as a whole.
Probably like you, each month we receive numerous unsolicited junk mailings (both the snail mail and spam mail varieties), practically begging us to subscribe to their "indispensable" publications. Here's April's data:
Subscription offer
(per-issue) Discount off
cover price
US News & World Report 40 cents 90%
Business Week 59 cents 88%
Fortune 77 cents 85%
Smart Money 92 cents 74%
Kiplinger's $1.00 71%
BUMP Index (Average):
81.6
We'll start looking for the bottom in the U.S. markets when the BUMP hits 95, or when half of the names on this list go out of business, whichever comes first.
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Also by Grizzly
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