The Bear had a huge feast from 2007-2009. We all know that a two-plus year hibernation followed.
That said, recent volatility suggests that the Bear is stirring from his slumbers.
But many on Wall Street expect him to go right back to sleep.
CNBC just reported (9/29) the market outlook of a well-known "market strategist":
"His optimism extends to the stock market. He doesn't expect 'a booming bull market, but we're in a bottoming process here and stocks will be somewhat higher at the end of the year.'"
And that's not the half of it. The August 15 cover of a major financial publication featured twenty-four different "buy" recommendations. Other bullish headlines are scattered throughout the financial media.
Yet the evidence suggests that investors' risk appetites are diminishing, as the Sept. Financial Forecast says:
"Volatility is clearly rising...Another clue to the market’s ultimate destination is that the wild price swings accompanied the fading risk appetite that we talked about in June. OTC Bulletin Board trading figures show that total share and total dollar volume for these off-exchange shares are falling hard. By both measures, OTC volume is already bearing down on the lows established in November 2008 (share volume) and February 2009 (dollar volume)."
Please consider the chart below:
Moreover, small capitalization stocks and less liquid sectors have led some recent daily declines. This is from the Sept. 28 Short Term Update:
"...today's decline appears to be led by the higher-beta secondary indexes, which were down nearly 3½% on the day (Value Line Index)."
And Oct. 3rd trading took the Russell 2000 Index down 5.38%.
What about the stock market overall? Where could the "bear path" lead?
"No market approach other than the Wave Principle gives a satisfactory answer to the question, 'How far down can a bear market be expected to go?'"
Elliott Wave Principle, p. 66
Robert Prechter uses the Wave Principle to show you his radical stock market forecast, via his unique video edition of the August Elliott Wave Theorist.
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