Stocks Don’t Go Straight Up (or Straight Down)

Big stock market trends don’t progress up or down in a straight line. In a bear market, stocks typically rebound after the first leg down. In a bull market, the opposite happens: Stocks again take a big dive, making everyone think the bear market has returned.

But in a bear market, that “first leg down” is wave 1 and the partial “rebound” which follows is wave 2. I say “partial” because the only rule which applies to wave 2 is that it cannot retrace 100% of wave 1. Meaning, the bear market rally cannot go above the previous market top.

How to Prepare for a Hard-Hitting Bear Market (Think 1929-1932)

An important step in preparing for a historic bear market is to embrace cash or cash equivalents.
This may seem obvious, but even with the stock market in a downtrend, cash is shunned by many an investor — retail and professional. Many of these investors believe the bull market will resume — sooner rather than later.

Is the Buying Opportunity Here Yet?

With the market down so sharply many are speculating that it will rebound just as sharply but market sentiment might be indicating something else altogether.

This Doesn’t Happen in Bear Markets

When the stock market peaked in late January, many hypothesized it was the beginning of a long-term bear market.  As shown in the S&P 500 monthly chart below, stocks posted red months in February and March, and went on to post gains for five consecutive months.  The green months in April, May, June, July, and August mean the S&P 500 posted gains in 11 of the last 13 months.

Beware of Bears

The bearish case is beginning to make more and more sense. In my recent NASDAQ ROC stock commentary I warned that based on age alone the bull market is getting “long of tooth” and could generate a sell signal soon. And then we had Obama’s Comments Worry Stock Bulls showing how recent rhetoric by the President […]

Prechter: “This is Not a Picture of a Bull Market”

The three-and-a-half-year rally has occurred on declining volume By Elliott Wave International What a comeback for the Dow Industrials! From a March 9, 2009, close of 6,547, the senior index climbed to 13,610 on Oct. 5, 2012. Moreover, the Dow achieved this feat in the face of a weak-kneed economy, and it has grinded forward […]

See Prechter’s “FREE FALL TERRITORY” Chart for Yourself

And see EWI’s long-term forecast in the updated “Free Fall” chart In the May 2008 issue of his monthly Elliott Wave Theorist, Robert Prechter showed this chart of the Dow Jones Industrials. As you can see, prices go back to the 1970s. Please note that on the day this chart published (May 16), the Dow […]

Spotting Trade Setups- A Quick Four-Chart Lesson

One major key to profitable trading is finding high profitability trade set-ups with a high probability of success. Fortunately, once you understand the Elliottwave patterns finding high probability patterns is much easier. In today’s lesson we have the opportunity to use four simple charts to spot a bear market setup. A Four-Chart Lesson in Spotting Trade […]

The Bear Market and Depression: How Close to the Bottom?

“People are more bearish than I have ever seen them. This has to be a bottom.” The first half of this statement may well be true for many market observers. If one has been in the market for less than 14 years, one has never seen people this bearish. But 14 years is a short time. What about the past 100 years of stock market history?

Big Bear Markets: More Than Falling Stock Prices

Fear and uncertainty that drive a severe bear market are the same emotions which can set the stage for authoritarianism, in most any nation. Why do authoritarian tendencies emerge only during bear markets in stocks? Bob Prechter’s new science of socionomics gives you answers.