105 years ago today, (March 2, 2009), beloved children's book writer Theodor Seuss Geisel, a.k.a. "Dr. Seuss", was born. In his honor, I put the near 300-point fall in the Dow Jones Industrial Average into these, rhyming words:
"OW! Me, OW! My" the Dow it cried, as the market fell hard and sure.
Plunge, plunk, lunge, sunk -- the 7,000 level no more.
I do not like bears in my stocks, I do not like bears in my socks,
I do not like bears in my shares, I do not like bears anywhere
But WHO knew the grizzly would get so mean
WHO had this market's fate Foreseen?
Answer: The mainstream experts did NOT accurately anctipate the depth and degree of the bear market's decline. Instead, they saw every bounce off of a passing floor as the official "Bottom" of the Dow's downward slide.
To jog the log in your memory, let's go back to Spring 2008: The DJIA was orbiting the impressive 12,400 galaxy and enjoying frequent triple-digit rallies. According to the go-to-guys/gals of Wall Street, the market's ability to "shrug off" the daily slew of negative economic data was a surefire sign that the bear's bottom was close at hand. "Are You Ready For Dow 20,000," asked one March 24 Barrons.
In reality, the Dow was weeks away from falling below a key, decades-old trendline, thus signaling that the worst of the bear was very much AHEAD of the market. At the time, the April 2008 Elliott Wave Financial Forecast presented the fine details in this labeled close-up of the DJIA and wrote:
"The support provided by the trendline up from the 1974 low is the more critical level because a convincing break will confirm that the next leg down is underway. The next potential trendline support is thousands of points lower."
A 30%, seven-month sell-off later, the November 2008 Elliott Wave Financial Forecast made room for a temporary "bounce" to alleviate the oversold condition in the market. Once finished, EWFF warned of a bearish return:
"The blue-chip index should fall through the October 10 interim low in a wave of selling. The key is that wave five down is NOT complete."
From its November 21 low, the Dow rallied 20% until early January. Days before its peak, the January 7, 2009 Short Term Update saw the bearish stage being set and wrote:
"The first potential is the top one and it means the entire rally from the November low is complete. The declining phase that has now started… will draw prices well below the 11/21 low (7449).
Oh the places the Stock Market Will Go. Know the full extent of the opportunities ahead via a
risk-free subscription today.