Robert Prechter's Market Forecast
I received the June edition of "Market Technician" yesterday from The Society of Technical Analyst ( STA ) UK. Apparently, Robert Prechter visited STA UK in February and presented a speech to the STA members during the monthly meeting.
Robert Prechter is considered the authority of Elliott Wave Theory. He is the 5th generation successors of R.N Elliott ( followed by Hamilton Bolton, Charles Collins, A.J.Frost, Richard Russell ). These people have been able to make accurate predictions of the major turning points of the market since 1942.
Anyway, to cut the long story short.... Prechter has made the following prediction to the market:
"..... in March 2009, we predicted the Dow would rally all the way back to 10,000. We also said that the rally, regardless of extend, would peak out amidst substantial feelings of optimism, and by its end investors would be convinced that the bear market was behind us. This would occur right before the onset of wave three, the steepest portion of the steepest wave, which will see the most intense stock selling in nearly 300 years...."
".....To sum up, I think we have had three major tops in the past 10 years - in January 2000, October 2007 and here in 2010. I believe we are tracing out the right shoulder of a large head and shoulders pattern......"
After reading the article, I turn the DJIA chart to monthly view. I was able to find the Head and Shoulders Pattern Prechter mentioned:
Note, however, that this is a monthly chart and we are talking about a very large time frame ( super cycle wave ) tracing back to 1942. I don't think he meant to say the stock market will crash in 2010 and will fall like a bag of beans. The left shoulder took 2~3 years to complete. The right shoulder may probably take an equal amount of time too. I think what he said was DJIA will glide down gradually. On a day to day, week to week basis, there will still be rally after rally giving the illusion we are in a new bull. But for every "high" it has made, it is going to be lower then the one before. If he is correct, then you will not see Dow revisiting 11,000, 12,000, 13,000 or 14,000 in the coming years!
Robert Prechter is considered the authority of Elliott Wave Theory. He is the 5th generation successors of R.N Elliott ( followed by Hamilton Bolton, Charles Collins, A.J.Frost, Richard Russell ). These people have been able to make accurate predictions of the major turning points of the market since 1942.
Anyway, to cut the long story short.... Prechter has made the following prediction to the market:
"..... in March 2009, we predicted the Dow would rally all the way back to 10,000. We also said that the rally, regardless of extend, would peak out amidst substantial feelings of optimism, and by its end investors would be convinced that the bear market was behind us. This would occur right before the onset of wave three, the steepest portion of the steepest wave, which will see the most intense stock selling in nearly 300 years...."
".....To sum up, I think we have had three major tops in the past 10 years - in January 2000, October 2007 and here in 2010. I believe we are tracing out the right shoulder of a large head and shoulders pattern......"
After reading the article, I turn the DJIA chart to monthly view. I was able to find the Head and Shoulders Pattern Prechter mentioned:
Note, however, that this is a monthly chart and we are talking about a very large time frame ( super cycle wave ) tracing back to 1942. I don't think he meant to say the stock market will crash in 2010 and will fall like a bag of beans. The left shoulder took 2~3 years to complete. The right shoulder may probably take an equal amount of time too. I think what he said was DJIA will glide down gradually. On a day to day, week to week basis, there will still be rally after rally giving the illusion we are in a new bull. But for every "high" it has made, it is going to be lower then the one before. If he is correct, then you will not see Dow revisiting 11,000, 12,000, 13,000 or 14,000 in the coming years!
PS: Anyone interested in the article may leave me a comment with your e-mail address.
Labels: Market Direction
posted by Market Wizards @ July 08, 2010
Comments: 1
