www.bearmarketcentral.com - Grizzly's Growlings 05/30/03

Grizzly's Growlings
May 30, 2003
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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

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Our 2003 Forecast: The "Great Bear Market of 2000-200[?]" Continues