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New Year's Euphoria and the Dow Industrials Breakout That Bombed
Will stock market history repeat itself?

By Bob Stokes
Thu, 03 Jan 2013 16:45:00 ET
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In 1968, Mary Hopkin sang about youth and romantic idealism: "Those were the days my friend, we thought they'd never end ..." 

That lyric could apply to the bull market of the 1980s and 1990s.
By January 2000, stocks had risen for nearly nineteen years. Even so, many market participants did not see an end. Instead they saw a "breakout," which -- as the Jan. 2 Short Term Update recalls -- proved to be an illusion.
The New Year euphoria generated by the "cliff deal" is strangely similar to the Y2K stock market euphoria in 2000, when the Millennium bug didn't "blow up" the world and the Dow surged to a new high shortly after the year began. That New Year "breakout" proved to be short-lived, representing the final upward stab for the rally leg that had started the previous October. By early March 2000, the Dow had retraced the entire push and then some. The circumstances now are obviously different, but the psychology feels similar. At present, the U.S. averted a plunge over the "fiscal cliff" and the just-completed agreement has generated a great deal of excitement.
Financial Forecast Short Term Update, Jan. 2, 2013
And now, as 2013 begins, euphoria is abundantly evident.
For Stocks, Record Highs Lie Beyond the Cliff –Deutsche Bank
Wall Street Journal, Jan. 2
Dear reader, New Year's stock market euphoria is not emanating from the financial fringe.
Other recent headlines also indicate that top-tier Wall Street firms are "all-systems go" on stocks. Fiscal fear among the financial establishment is conspicuously absent.
The Short Term Update, Financial Forecast and Elliott Wave Theorist comprise EWI's flagship Financial Forecast Service. And all 3 publications take subscribers beyond the financial headlines, and provide insight into what may likely become tomorrow's headlines.
Indeed, the first Theorist of 2013 grabs you by the collar with a specific stock market forecast for the next 3-1/2 years -- a "must read."


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  • Theorist -- Bob Prechter's monthly big-picture insights.
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