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Economy , Stocks

Stocks and Economy: Why 2022 May Have Just Been the Preview

“Fight the inertia that will keep you from taking action to prepare for the downturn”

by Bob Stokes
Updated: December 13, 2022

The main show is likely about to begin.

2022 may have just been a preview of what's ahead for stocks and the economy, which Robert Prechter's Last Chance to Conquer the Crash warned about nearly a year ago, and our Global Market Perspective discussed at the start of 2022.

Let's start with that warning from our January 7, 2022 Global Market Perspective via these charts and commentary:


The blue-chip Dow Industrials and S&P 500... managed to eke out new highs in the first two trading days of 2022. There is a good chance that Wednesday's trend reversal is the start of a long-term decline.

The "Wednesday" referenced was Jan. 5 and indeed, an all-time high for the Dow Industrials occurred on that very date, with the S&P 500 hitting its high on Jan. 4. Mind you, the Global Market Perspective's forecast was made in real-time -- just two and three days, respectively, after those all-time highs registered.

As you know, the blue-chips have been in a downtrend since, albeit accompanied by some very sharp rallies -- which is not unusual during downtrends.

Let's now turn our attention to Robert Prechter's Last Chance to Conquer the Crash, which, as a reminder, published nearly a year ago and warned of a major economic contraction ahead. This is from the book:

Fight the inertia that will keep you from taking action to prepare for the downturn. Start taking steps now. ... Think globally, not just domestically.

Yes, when the good times are rolling and stock market indexes are reaching new all-time highs, it can seem unnecessary to prepare for a downturn.

But, as you read these headlines, many people likely wished they had:

  • Household wealth down by $13.5 trillion in 2022, second-worst destruction on record (Marketwatch, Dec. 9)
  • Tech Layoffs in U.S. Send Foreign Workers Scrambling to Find New Jobs (The New York Times, Dec. 9)
  • Economists: A US housing recession has already arrived (The Hill, Dec. 7)
  • Defaults Loom as Poor Countries Face an Economic Storm (The New York Times, Dec. 3)
  • The UK economy is sliding into recession and Europe is set to follow (CNN, Nov. 11)
  • China's super-rich see fortunes plunge as economy slows (The Guardian, Nov. 7)

There are many more similar headlines.

The stance of Elliott Wave International is that these headlines represent only an inkling of what's likely ahead.

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