Sunday November 2. 2003
Greetings once again, bears and bulls alike.

Despite (or perhaps even because of) the rally extension through the summer and into early autumn, little has changed since our June 28th report when we raised our outlook for the markets to FULL CRASH WARNING. This is our highest level of preparedness, the financial equivalent of the Homeland Security Department's terrorism threat level of RED. We believed then, and we still believe now, that all the conditions and prerequisites are in place for a "crash of historic proportion" to happen at any time.

To our critics who berate us for our failed attempts to pinpoint, in real-time or thereabouts, THE top of the long and painful counter-trend rally, yes, we plead guilty as charged. The markets have held up much better and for much longer than we had expected.

As noted, we've been wrong before, but can only call 'em as we see 'em.

At this juncture, it appears that this wave C rally extension has just about run its course. Here's our Elliott Wave big picture in the Nasdaq, going back 3 1/2 years to the all-time high of 5,032 in March 2000.

The large wave 2 counter-trend bounce from last October may have only a few more squiggles to the upside remaining. Wave 3 is imminent. Wave 3 is what we have been anticipating, a devastating down-leg that will take the markets to new lows, well below 5,000 on the DJIA and 1,000 on the Nasdaq.

In addition to the Elliott Wave picture, all of the reasons we cited in our June 28 report remain valid.  Our analysis and outlook for the stock markets cannot be any clearer or more bearish: We've updated and expanded the June 28th Bear Market Gallery.

But don't take our word for all of it, or any of it. We urge you, we implore you, we beg you to jump over to fnancialsense.com and listen to Jim Puplava's round-table discussion with market technicians/historians Peter Eliades, Kennedy Gammage, Tim Wood and Robert Prechter. These venerable gentlemen lay out all the bloody details for you. This is a 5-star, don't miss program! We wholeheartedly and completely concur with their conclusions: by virtually all standards and measures, the markets are historically overvalued, technically overbought, and ready to plunge.

Real Estate
The real estate bubble has (so far) only cracked, not burst. However, there are increasing numbers of pockets across the country where the downside cycle has begun in earnest. For example, in just the last three days these stories have graced the newspapers n formerly hi-flying Denver:

11/02 Ceiling drops on high-prices for high-end homes. One high-end developer in Denver says it all: "It's terrible. The market is dead right now." (link to article not available at press-time)

11/01 Median metro home prices drop in October

10/31 Apartment owners facing bleak times

The decline isn't waiting for mortgage rates to rise again.

Gold
We don't usually comment on gold, but we think it's at an interesting juncture here. The formidable $400 milestone is but a stone's throw away, and gold may soon receive the jolt it needs to hurdle that barrier. The long-delayed gold ETF may actually be christened on the NYSE before the end of the year. Gold bugs see the fund as a solution to the longstanding logistical hassles that have kept gold out of many investors' portfolios. The fund should (literally) add tons of demand for the metal each year.

The BUMP
Our just-for-fun BUMP index surged to 84.6% in October.

Sunday October 19, 2003
In his latest (Oct. 15) interim report, Elliott Wave expert Robert Prechter states unequivocally:

"... I am not nervously bearish or on the fence. I am all-out, no-holds-barred, shout-from-the-rooftops, yet-another-opportunity-of-a-lifetime-bearish. Wave patterns, cycles and technical indicators have developed into an astonishingly one-sided message. A market analyst dreams about a confluence of indicators this extreme."

We can add absolutely nothing to those comments. Our outlook for stocks remains: FULL CRASH WARNING! Stay tuned!  -- Grizzly

Saturday September 27, 2003
The DJIA dropped 331 points this week (Sept. 22-26), and the Nasdaq plunged 6%. Is this the turn we've been looking for? We think so, but yes we've been wrong before. Stay tuned! -- Grizzly

Saturday September 20, 2003
No sense in beating around the bush - our call for DJIA 9,599 (Sept. 6) as the top of this long and lasting counter-trend rally was premature. The manic bullishness and overconfidence has not (yet) abated. It has defied our expectations as well as gravity. The bubble is inflating anew, and to historic proportions. The current bubble will burst, whether or not we or anyone else can pinpoint it in real-time or thereabouts.

As we've often discussed, bull market rallies serve their purpose: to suck in as many investors as possible and recreate the belief that 'the good old days" are back. The extreme bullish sentiment as well as the other warning signs discussed in our last few reports remain firmly in place, and the risk of a "crash of historic proportion" (a la October 1987) remains extremely high. Stocks remain on FULL CRASH WARNING.  -- Grizzly

Sunday September 14
Greetings once again, bears and bulls alike.

Little has changed since our June 28th report, when we raised our outlook for the markets to FULL CRASH WARNING. This is our highest level of preparedness, the financial equivalent of the Homeland Security Department's terrorism threat level of RED. We believed then, and we still believe now, that all the conditions and prerequisites are in place for a "crash of historic proportion" to happen at any time.

Yes, contrary to our expectations the markets have not (we think yet) cracked, but neither has the alleged New Bull Market continued. Things definitely aren't as rosy as the cheerleaders on CNBC would like you to believe. The DJIA went a net nowhere this summer. The DJIA reached an interim peak of 9,406 on June 17. It closed this Friday (Sept. 12) at 9,471. The S&P 500 is up a whopping 3 points over this same timeframe. Not exactly a rip-roaring rally!

Admittedly, we did not anticipate the additional small-degree zigs and zags higher over the last ten weeks. At this juncture, it appears that this rally extension has run its course, and the markets have turned down. Here's the short-term picture in the Dow Jones Industrial Average.

In Elliott Wave terms, the large counter-trend bounce wave 2 from March ended last Friday (Sept. 5), and wave 3 to the downside has just begun. Wave 3 is what we have been waiting for, a devastating down-leg that will take the markets to new lows, well below 6,000 on the DJIA and 1,000 on the Nasdaq. As it usually seems to pan out, we'll be looking for a short-term low in mid October. Only a burst back above the recent high of 9,599 will postpone our short-term bearish analysis, but it would have no bearing on the larger bearish picture.

In addition to the Elliott Wave picture, all of the reasons we cited in our two previous reports for our extreme bearishness remain valid. (Please take a few moments and review those reports: June 28   August 2.)

Here are a few more recent tidbits of financial fodder for our "Great Bear Market of 2000-200[?]":

• The already manic bullish sentiment on The Street has exuberated even further. The American Association of Individual Investors' latest reading is a stunning 74.1% to 8.6% stampede for the bulls. This is the largest Bull-Bear spread since, uh oh, August, 1987.
   

• "Insider" selling is swamping buying by an staggering rate of 44-1. This is the highest ratio on record.
   

• VIX, the well-established measure of trader complacency and confidence, sank to yet another new low reading of 18.29 on September 8th. The VIX last tested such shallow waters back in late August 2000. The DJIA then proceeded to plunge 1,650 points over the next six months. Our lifeguard Mr. VIX continues to scream: "Get out of the water, NOW!"
   

• A growing chorus of U.S. senators is trying to score political points with their newly unemployed constituents by threatening stiff import tariffs and other measures against that job-stealing juggernaut, China. Messrs Smoot and Hawley are rolling over in their graves.
  

• With the bursting of the credit and interest rate bubble, mortgage re-financings are down 78% since May. The flood of cash-out re-fi deals has slowed to a trickle.

The Economy
To repeat our overall perspective, we believe the current economic situation is much worse than the official U.S. government statistics would lead you to believe. We caution that virtually all government-reported economic data must be taken with a grain of salt. This is not out of some dark and dangerous conspiracy, but out of the outdated, obsolete and ineffective methodologies used to measure, analyze and "adjust" all the data.

GDP rose by a reported 3.1% in the second quarter, but that figure is bloated by a 46% increase in government defense spending due to the war in Iraq, and by the last gasp batch of mortgage re-fi cash-outs. Third quarter data will be skewed by the $400 tax rebate checks sent to 20 million households, just in time for the big "back to school" shopping season. What will it be in the fourth quarter?

Wall Street went goo-goo over Wal-Mart a few days ago when it reported stronger than expected sales. What they didn't tell you is that a large portion of the increase was not "new demand," but merely the acquisition of hundreds of thousands of former KMart customers who now have nowhere else to shop.

We think trends such as those below are more indicative of the true state of consumer spending, the engine of growth for the U.S. economy: weak!:

• "Buy One, Get One Free" sales have always been a dime a dozen, but more and more "Buy One, Get Two Free" sales are being offered at the major national grocery chains. Our local Albertson's is currently running a "Buy One, Get Three Free" sale!
   

• Two local automobile dealerships are offering quasi-"BOGO" sales on brand new 2003 model cars!
   

• The next time you visit your local CompUSA, OfficeMax Office Depot, etc., take note of the hundreds of dollars of merchandise you can acquire for free, at no cost net of mail-in rebates. If you have the time, the patience, and enough postage stamps and envelopes, you can build a new computer piece by piece for next to nothing.
   

• The "Dollar Store" industry has survived its initial growing pains and has matured into a viable concept. If you don't have a dollar store in a shopping center near you, you will soon! The question "Should I buy an American-made widget for $5.95 or a nearly identical Chinese version for $1.00?" has been answered.
   

• If you don't shop online at eBay, and we mean shop for everyday items, you're probably spending too much. From brand new Donna Karan cashmere sweaters to used Yugos, almost every consumer and business product in existence can be acquired at a bargain price.

According to the econo-crats who get paid handsomely to decide such matters, the recession officially "ended" in November 2001. Don't tell that to the 1.5 million workers who've lost their jobs since then! The economy lost another 93,000 jobs in August. The "expert" economists surveyed by Reuters were looking for a small increase in jobs. This all follows July's revised drop of 49,000.

We know, we hear it every day: "employment is a lagging indicator." True, but that does not rationalize or justify the continuing dismal data. Economic history shows there really isn't much of a lag to speak of anyway; it's usually a matter of only a few months, not a few years. The country can't handle much more "recovery" like this.

Saturday August 02. 2003
"Pop Goes the Bubble," Acts I, II, III, & IV

Act I - Stocks
Back on April 3, 2000, just three weeks after the all-time peak in the Nasdaq of 5,132, we concluded "Pop Goes the Bubble." Despite the long counter-trend bounce (so far) this year, the Nasdaq is still down a stunning 66% from the peak. Hundreds of Nasdaq stocks fell 85-99% before reaching a temporary bottom last October.

In our last report, we went out on the proverbial limb and stated

We have 95% confidence that the Elliott Wave 2 bounce has ended [on 6/17], and that the next leg of the "Great Bear Market of 2000-200[?]" is underway.

This outlook has been tested, to the max. On Thursday (07/31), the DJIA came within 8 points of the 06/17 intra-day high of 9,406. (The S&P 500 and the Nasdaq didn't come close to surpassing their respective recent peaks.) From there, the DJIA plunge 160 points in the next 90 minutes. Friday's additional 79 point loss to 9,153 adds additional evidence that resistance at 9,400 will hold.

Two weeks ago, economist and author Charles Kindelberger passed away. He never wrote a famous best-seller, but his 1972 Manias, Panics and Crashes: A History of Financial Crises is an invaluable masterpiece. In it, Kindelberger exposes and analyzes the common threads that run through every major crash and financial panic on record. We have a lot to learn from history, and when it's all said and done, the "Great Bear Market of 2000-200[?]" will prove to be another remarkable chapter worthy of study by future historians. Check out Manias, Panics and Crashes: A History of Financial Crises at your local library or at amazon.com.

Thursday July 24 8:00 PM EDT
The VIX plunged today to an extreme intra-day low of 19.63 before bouncing back as the markets got mauled in afternoon trading. The VIX has only been lower than 19.63 on three days since the "Great Bear Market of 2000-200[?]" began. On July 23, 2001 the VIX hit an incredible 13.38. From there, the S&P 500 tanked 11% over the next 33 trading days into Sept 10th. And of course things worsened even further following September 11th.  Mr. VIX is screaming: "Get out of the water, NOW!" Stocks remain on FULL CRASH WARNING!  -- Grizzly.
 

Saturday June 28 8:00 PM EDT
Outlook for stocks raised to FULL CRASH WARNING!

To those who rock in "The Cult of the Omnipotent Fed," we salute you! It's been quite a show!

You had The Street right where you wanted it, agonizing for weeks over a 25 vs. 50 basis point cut. (We think the difference is irrelevant.) You diverted attention from the overriding issue: the weak and still faltering economy, and the imminent realization of the Fed's worst nightmare. Sir Alan and His Merry Monetarists are so worried about the threat of a "3D" scenario, a "devastating deflationary depression," they've gone ahead and fired the last arrow in their quiver.

The target for the federal funds rate now sits at an even 1%. Put a fork in 'em, they're done. Any further cuts would be disastrous. The $3 trillion money market fund industry would be crippled. The average 7-day yield on money funds is already down to a microscopic 0.64%. Lower returns would put many of them out of business, or force their parent companies to fork out massive subsidies to keep them afloat. Imagine the resulting panic and confusion if money market funds weren't worth $1.00 a share!

Why is this man grinning like Mona Lisa? (Beats us!)

Low investment returns are also wreaking havoc with the mega-pension funds, which are already extremely under-funded due to losses on the equities side over the past three years. Current fixed-income returns are way below expected targets, creating new liabilities for their already thinly stretched parents such as General Motors, General Electric and Delta Airlines.

These historically low interest rates have set a historically dangerous, world-class trap for the housing market. When rates start to rise (it's only a question of when), it will be the pinprick of death for the housing bubble.

Over the past two years, just about every homeowner has refinanced his/her mortgage (some two or three times), with many "cashing out" all or part of the accumulated appreciation of the property. When housing prices start to decline (it's only a question of when), homeowners will become, as they say in the auto financing industry, "upside down," when the balance of their mortgage exceeds the value of the underlying asset.

Financial Upside-Down cake would not be appetizing fare for either lenders or borrowers. If stretched and stressed, by say the loss of a job, keeping up with the house payment may no longer be top priority. Lenders will have inadequate collateral for the loan. The banks, and the beleaguered Freddie and Fannie (backed by us working stiffs, the U.S. taxpayers) will end up holding the bag. It won't be pretty, or cheap.

The Fed's final rate cut has done, and will do, nothing positive for the equity markets. The DJIA plunged 150 points immediately following announcement of the cut. The widely expected end of quarter window dressing was undressed. The emperor has no clothes either.

Our analysis and outlook for the stock markets cannot be any clearer or more bearish:

But don't take our word for all of it, or any of it. We urge you, we implore you, we beg you to jump over to fnancialsense.com and listen to Jim Puplava's round-table discussion with market technicians/historians Richard Russell, Peter Eliades, Kennedy Gammage and Tim Wood. These venerable gentlemen lay out all the bloody details for you. This is a 5-star, don't miss program! We wholeheartedly and completely concur with their conclusions: by virtually all standards and measures, the markets are historically overvalued, technically overbought, and ready to plunge.

Furthermore, the Elliott Wave picture is just about as bearish as it gets. The long and lasting counter-trend wave 2 bounce from last October's lows appears to have ended 10 days and 300 points ago (9330 on June 18). The DJIA has been heading south since. The exact labeling of the small-degree wave pattern is ambiguous at this moment and we present one count below, showing a small-degree five-wave decline in progress. Wave 3 of 5 is underway, and should carry lower through the July 4th holiday before bouncing. Alternatively, wave 2 may add a few more small zigs and zags higher through July 4th before completing wave 5. Either way, the wave patterns strongly indicate sharply lower prices through the summer.

We have 95% confidence in our outlook that the Elliott Wave 2 bounce has ended, and that the next leg of the "Great Bear Market of 2000-200[?]" is underway. Accordingly, we are raising our outlook from FULL CRASH ALERT to FULL CRASH WARNING. This is our highest level of preparedness, the financial equivalent of the Homeland Security Department's terrorism threat level of RED. 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 Warning is not to frighten or intimidate. We feel obligated to bring to the table this potentially very serious situation that you won't 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'll keep you posted as the waves unfold over the coming weeks. It's going to be one helluva ride.

For those interested, please review our Great Bear Funds page for a list of those few mutual funds that can capitalize on a major market decline. Invest carefully, at your own risk. Please read the disclaimer.

Our new BUMP index surged in June to 85.0.

Have a great 4th of July holiday and thanks for visiting www.bearmarketcentral.com. While you're here, come on in and have a look at the rest of the site. See the table of contents at the left or bottom of this page.  -- Grizzly

Agree? Disagree? Express your opinion in our "Hair of the Bear" Discussion Forum.

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Wednesday June 04 9:00 PM EDT
FLASH UPDATE
No sense in beating around the bush - our call for LAST Monday as the top of this long and lasting counter-trend rally was premature. The manic bullishness and overconfidence continues to expand and accelerate with every uptick. It is defying our expectations as well as gravity. The bubble is inflating anew, and to historic proportions.

Back on April 3, 2000, less than a month after the all-time peak in the Nasdaq of 5,132, we concluded "Pop Goes the Bubble." The current bubble will burst as well, whether or not we or anyone else can pinpoint it in real-time or thereabouts.

So in the meantime, we'll abide by our self-imposed "shut-up" ordinance and keep an eye on things from the sidelines until we have evidence of a top. Specifically, in Elliott Wave terms we'll be looking for a solid small-degree five wave advance to conclude the rally, followed by a substantial five wave decline that will initiate the next major downturn.

Make no mistake about it, we remain firm in our belief that a new bull market is not underway. The "Great Bear Market of 2000-200[?]" still has a lot of unfinished business to attend to before it's all over. Stay tuned! -- Grizzly

"If I seem unduly clear to you, you must have misunderstood what I said."
Federal Reserve Chairman Alan Greenspan
 

Monday June 02 9:00 PM EDT
FLASH UPDATE
The markets stormed higher right out of the gate Monday morning. At 2:00 PM the DJIA was able to poke its nose above 9,000, but the air was too rarified. A (bear) trapdoor sprung open and the DJIA reversed 120 points in the next 90 minutes. The Nasdaq plunged from +24 to -10.

In all likelihood, today's reversal marks the end of the large counter-trend bounce from mid-March. Today's highs (DJIA 9003 and Nasdaq 1620) should not be exceeded. These are our new "put up or shut up" levels for the immediate bearish case.

Today CNN's feature story tries to make the case that "the rally in stocks isn't just a little rebound in the context of a long decline." Obviously, we disagree. We think CNN's thin rationalization will mark the final uptick of the rally.

The Nasdaq 100 futures are off another 6 points in early evening trading. Stay tuned for a wild ride! -- Grizzly
 

Saturday May 30 9:00 AM EDT
In our last report, we began:

With apologies to that noble American Revolutionary Thomas Paine, "These are the times that try bears' souls."

Indeed, the trying and frying of our souls has extended and intensified. The markets steadily bucked our expectations for May, and continued to advance. For the month, the Nasdaq gained 8.9%, the Dow gained 4.3% and the S&P 500 5.1%.

There's a new program running on the Outdoor Life Network (OLN) these days, called Bullmania. The program features "great moments from the sport of bullriding." Professional bull riders of the '80s and '90s are shown hangin' on for the rides of their lives. Yeeeeehaww!!!   

Bullmania might as well be running on CNBC, as it's the same thing on Wall Street. Nostalgia for the historic '80s and '90s bull market is running roughshod over us few remaining bears. Save ourselves and a few stallwarts such as Elliott Wave International, Jim Puplava of Financial Sense Online and Damon Vickers, "everyone" is not merely bullish, they're wildly so.

We discussed the wild-eyed bullish sentiment in our last report, and since then optimism and confidence that a "new bull market" is underway has actually accelerated to near-record levels, higher than found at the bull market's peak three years ago!

Michael Burke, editor of Investors Intelligence, tells newsletter tracker Mark Hulbert that "current high levels of newsletter optimism are "very, very scary." Hulbert also reports that his sentiment index has soared 11.7 points since April 8th. "That's an extraordinary jump onto the bullish bandwagon, just the opposite of the wall of worry that bull markets like to climb,." concludes Hulbert.

The VIX continues to reflect near-record overconfidence and even cockiness on behalf of the bulls. The 20-21 area has marked the end of many rallies in the prior bull market as well as counter-trend bounces in the "Great Bear Market of 2000-200[?]" The VIX is shouting, loud and clear, "get out of the water!"

The mania is multiplying and manifesting in other markets. Bond yields are at 40+ year lows, and can be measured only through a microscope. The Euro is having the US dollar's lunch nearly every day. Gold fever is bubbling up again with the run to $375.

But as little Billy in the back of that vacation-bound minivan keeps asking, "Are we there yet, are we there yet?"

We thought we were there a couple of exits back, and we certainly don't profess to having a crystal ball that can call the turn to the exact minute. But we remain more convinced than ever that this is a picture of a market top. The counter-trend bounce has accomplished its purpose, namely to re-inflate the hopes and expectations that fed the mania in the first place.

Despite May's continued rally, our Elliott Wave analysis hasn't changed. The wave 2 counter-trend bounce has extended beyond our originals expectations in terms of both price and time. The DJIA has bounced to just below our "put up or shut up" resistance area just above 9,000. We're not quite ready to shut up.

The last leg of the rally (wave C of 2) may have a few more small degree zigs and zags still to go over the first few days of June. A break of key support at the recent wave 2 low of 8,000 should confirm that the expected large wave 3 to the downside is underway. Only an unexpected surge above key upside resistance at the larger wave 2 peak just above 9,000 would send our bearish case back into hibernation (though not into the grave).

To sum it up, despite, and actually because of the extent of the rally and the intensity of the bullish sentiment, we are undeterred. The short-term and long-term Elliott Wave patterns are extremely bearish, indicating that a full-fledged "third of a third" wave decline is dead-ahead. US stocks remain on FULL CRASH ALERT! Be on the lookout for a magnitude 8.2 shaker on The Street.

Our new BUMP index slipped a bit in May to 75.8.

Stay tuned, and thanks for visiting www.bearmarketcentral.com. While you're here, come on in and have a look at the rest of the site. See the table of contents at the left or bottom of this page.  -- Grizzly
 

Saturday May 03 7:00 AM EST
With apologies to that noble American Revolutionary Thomas Paine, "These are the times that try bears' souls."

The rally in the Nasdaq from its low of 1,275 on March 12th to Friday's close of 1,502 has been very painful for us Bears. The 1,200 point bounce in the DJIA from 7,400 has taken an eternity.

Indeed, our bearish stance has been tried, to the max. The rally has extended just about as far as it can. It's put up or shut up time for the bearish case. 

Thomas Paine's influential pamphlet Common Sense laid out the fundamental justifications for independence of the American colonies. In Paine's words, "all the arguments for separation of England are based on nothing more than simple facts, plain arguments and common sense."

To sum it up, despite, and actually because of, the extent of the seven-week rally, we are undeterred. We firmly maintain that the rally is typical and unexceptional, all within the framework of the "Great Bear Market of 2000-200[?]". The short-term and long-term Elliott Wave patterns are extremely bearish, indicating that a full-fledged "third of a third" wave decline is dead-ahead. US stocks remain on FULL CRASH ALERT! Be on the lookout for a magnitude 8.2 shaker on The Street.

Stay tuned, and thanks for visiting www.bearmarketcentral.com. While you're here, come on in and have a look at the rest of the site. See the table of contents at the left or bottom of this page.  -- Grizzly

Agree? Disagree? Express your opinion in our "Hair of the Bear" Discussion Forum.

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New commentary is posted as market conditions warrant.
If you would like to receive email notification when new commentary is posted, click here. 

Our 2003 Forecast:
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Monday 04/14/03 8:00 AM EDT
"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. 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 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) from the financial big guns, practically begging us to subscribe to their "indispensable" publications. Here's April's data: