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Grizzly's Growlings Current Report |
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Monday Morning Market Musings 08/02/99 |
| The Fat Lady’s Finale
Exactly one year and one week ago, we at bearmarketcentral.com went out on the limb and declared that "The Fat Lady is Singing!": Friday 07/24/98 Special Report The Fat Lady is Singing We at bearmarketcentral.com are going out on the limb. The 435 point decline in the DJIA over the last four days is the signal we've been waiting for. We think THE top is in. The bells are clanging and the whistles are screaching: The Fat Lady is singing!THE greatest Bull Market in history has been mortally wounded. We've just begun an equivalent Great Bear Market that will be as swift and prolonged to the downside as was the bull to the upside. DJIA 10,000??? Not anytime soon. Here's why: First and foremost, from an Elliott Wave perspective, we think the market has begun the first of many "5 waves" to the downside, which should carry the market well below 5,000 at a minimum. From a technical perspective, despite the June-July rally in the DJIA, the NASDAQ and the Internet stocks, the broader market has been very weak over this period. We think the market has run out of gas, nary a service station in site. Plus, there's a huge hole in the gas tank, and the carburetor is clogged. In "short," there's nothing to do except coast downhill. From an economic perspective, the deepening Asian depression is just starting to affect the US. Look for the vast majority of corporate earnings reports over the next 6-12 months to be deeply disappointing and disheartening. From a contrarian perspective, can anyone cite more than a handful of credible long-term bears? We can find hardly anyone outside of Bob Prechter, of Elliott Wave International. Most Wall Street anal-ists are looking for yet another short-term 10% "correction," one that will become another buying opportunity. The dip-buyers are salivating. Virtually no one is screaming: SELL!! SELL!! SELL!!Apparently the markets have immediately heeded Alan Greenspan's testimony before Congress, where he warned that a crack in the markets is inevitable. The question was just when. Well, we think it's NOW! We think the market has fundamentally turned from north to south. Future market surprises will be to the downside, and future rallies will be brief, choppy, and unconvincing. Many great fortunes will be made shorting stocks and buying puts over the next 3-5 years. bearmarketcentral.com is the place to be to keep abreast of the latest market action. We will be updating and enhancing this site to help you navigate and profit from this Great Bear Market. And oh yes, we are looking for a major crash in the US markets this October. Stay tuned!! As it turns out, The Fat Lady did sing, but she was just warming up. The markets did indeed make a top last July, and proceed to fall some 20 % into October 1998. From there, contrary to our expectations, the markets made a manic rush to new all-time highs. But this last gasp mad dash was very deceptive and devious. In the August Elliott Wave Financial Forecast, Wavemaster Robert Prechter points out these critical factors:
Indeed, only the major market averages and indices participated in the final blowoff of the Great Bull Market. For the week ending 07/30/99, the DJIA dropped 250 points and is now down 600 points (5 %) from the July 19th all-time high of 11252. The carnage in the NASDAQ has been even worse. The NDX is now down 200 points (8 %) from its all-time high. Last Thursday’s feeble rally attempt served only to temporarily reduce the short-term oversold condition of the markets. Monday and Tuesday hold the potential for yet additional precipitous mini-crashes for stocks. Oh yeah, the Fat Lady’s back, and she’s belted out her grand finale. The factors we cited last July have re-emerged and intensified. It won't be pretty. US STOCKS REMAIN ON FULL CRASH ALERT! The Internet stocks peaked in April 1999. Many stocks have fallen 30-40% since then. No one knows exactly how the new breed of online day-traders, who are so fond of the Internet stocks, will react once they realize that "buy the dips" doesn’t work any longer. Remember the stories of brokers jumping out of skyscraper windows in New York City during the crash of ‘29? This time, they’re not going alone. Unfortunately, the tragic killings of 12 people in Atlanta by "a day-trader concerned about financial losses" is but the first strikeout of the first inning. For some additional historical perspective, click here. It’s All in the Stars Astro-analyst extraordinaire Arch Crawford has his sights set on the solar eclipse and dramatic and unique planetary alignment surrounding August 11th. From recent Internet postings by Arch: Actual quote from our July letter: "MAJOR INSTABILITY = The WORLD will get a strong dose of MILLENNIAL MADNESS during the coming eclipse series. Political, Military and Social unrest at maximum with Economic and Financial repercussions aplenty! There may be surprise attacks across national borders, possibly involving Israel, and assassination attempts on world leaders, possibly including the US. We do not say these things lightly. This sequence of T-squares and Grand Crosses among the 'wandering stars' is Unprecedented in our lifetimes, and maybe for Millennia!"... "The world will get a strong dose of Millennial Madness during the coming Eclipse series. Political, Military, and Social unrest at maximum with Economic and Financial repercussions aplenty! There may be surprise attacks across national borders, possibly involving Israel, and assassination attempts on world leaders, possibly including the US. We do not say these things lightly. This sequence ... is unprecedented in our lifetimes and maybe for Millennia ... Never, ever have we observed combination after deadly combination culminating one after another in a truly apocalyptic sequence." I won’t go on because he is selling this and I do not want to get into the details. The sequence begins July 18, with July 26 and August 11 being particularly significant days, and then it seems the period begins to die down around the end of August.
Y2K update: T minus 152 days and counting Over the past few months, most of the national media have kept discussions of the "Y2K problem" on a low key. They don’t want to be accused of being alarmist, nor do they want to ignore a potential story of the century. Whether the Y2K problem is the massive disaster of the doomsayers or as empty as Al Capone’s vault, the rollover to Y2K will be an unprecedented historic event. With less than five months to go, here’s what an official government expert has to say in this Cox News Service story of July 23rd:
How seriously is the US government taking Y2K? They’re building a $40 million "Information Coordination Center" near the White House. Either they’re taking it very seriously, or they’ve got too much of our tax money to burn. Probably both. How seriously is the US government taking Y2K? They’ve passed laws limiting the liability of certain corporations in Y2K-related lawsuits. Do they fear that the Y2K problem will be so massive that it could ruin our economy, or is it just a political payback to big campaign contributors? Probably both. How concerned is the US Air Force? Check this story from Air Force Magazine. How concerned are state governments? The National Guard will be on full alert in many states as the odometer rolls over to 2000. How unprepared is the American public? A Denver Rocky Mountain News story proclaims "Y2K elicits yawns from most Americans." Though out of the headlines for some time now, the situation in Russia continues to deteriorate. In particular, negations with the IMF will soon yield to the reality of Y2K. The good news is that Russia is some 20-25 years behind the US in the level of computerization of its economy and society. They are far less dependent on computers that the rest of the industrial world. The bad news is that 20-25 years ago, software programmers had virtually no concern for the Y2K rollover. The vast majority of computer programs still in use across Russia are definitely NOT Y2K compliant. Clearly, such antiquated systems are not worth repairing. In fact, the official Russian government position is that they will fix affected systems after they break down. Clearly, Russia doesn’t have the economic or human capital to replace their vital systems with new programming. The only question is how much the resulting paralysis will impact world financial markets. Grizzly’s guess: look for massive selling of gold, oil, and just about anything else with cash value to flood the markets, feeding the already underway worldwide deflation. Check with our friends at www.russiatoday.com for the latest breaking news on Y2K and all the other events that are unfolding in Russia.Here's another wild card in the Y2K deck: according to experts at the American Astronomical Society, massive solar storms are predicted for early January as the 11-year sunspot cycle hits its zenith. This cycle peak will be different. In the 11 years since the last peak, literally millions of new communications devices in the forms of cellular phones, satellite dishes, and GPS units are now depended upon by literally billions of people around the world. These new technologies upon which we have become so dependent are at serious risk of being disrupted repeatedly, for extended periods of time. Can you live without your cell phone or sat dish?"Its
deja vu over again." Master of the English language, Yogi
Berra |
Grizzly
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