Thursday, August 6, 2009

Another major collapse on the way?

From a technical analysis article by Robert McHugh:
Stocks Markets world-wide are in a Grand Supercycle degree wave {IV} Bear Market. This is a huge Bear Market, meaning either in terms of time, or in terms of decline, it will be one for the ages. We believe it will be relatively short in time, but deep in decline. This Bear Market can take shape as one of three patterns, a massive sideways Triangle, a Flat, or a catastrophic Zig-zag. If it is a Triangle, it will be a pattern of five supercycle waves, and the low price has been reached on March 6th, 2009. That is the best case scenario. However, our fear is that we are going to get a Zig-zag pattern, with a potential downside target close to zero. Maybe zero to 1,000 in the Industrials, and zero to 100 in the S&P 500. Here is what we see:

Stocks are in the final wave of the eye of a hurricane of a Bear Market. The eye is the calm before the second half of a terrible storm. Once this spring/summer rally finishes, we expect a severe stock market decline again. That decline should be the end of the Bear Market that started in late 2007. This Bear Market is a Grand Supercycle Bear Market, one for the ages. The first part of the storm was wave (A) down, which lasted from October 2007 to March 2009. The Second of three parts, the eye, wave (B) up, started on March 6th, and this rally could last several more months. Wave (B)'s top could arrive around the 11,000 to 11,500ish area for the Dow Industrials. The third and likely final part will be wave (C) down, and will hurt.

Read the rest here, with lots of pretty graphs (or not so pretty, depending on how you look at it). Food for thought. You do have sell stops on all your stocks, right?

No comments: