Related Topics
Stocks , Investing
     

Severe Bear Market: Will You Be Among the Prepared 1.5%?

“Oftentimes, rallies will end with an inter-index non-confirmation”

by Bob Stokes
Updated: August 05, 2022

A long-long time ago in a galaxy far away... errr, on the heels of the year 2000 dot-com crash, to be exact -- which is ancient history for many investors today -- our February 2003 Elliott Wave Theorist published an interview with Elliott Wave International President Robert Prechter.

Prechter was asked if he was surprised by investors' lack of capitulation since the bear market started in 2000.

Prechter replied:

I read a statistic that said no more than 1 to 1½% of investors actually got out. This is utterly typical. The average investor stays in. [emphasis added]

This is mentioned because the patterns of investor psychology tend to repeat, which is the entire basis of Elliott wave analysis, which helps you track those patterns on the scale from intraday to multi-century.

So, with that in mind, consider what our July Elliott Wave Financial Forecast says:

Even as stocks fell hard into the middle of June, the bullish resolve of investors remained on display. On June 14, for instance, Bloomberg reported that "Undeterred Retail Traders Piled into Stocks."

The chances are high that many of these investors will hold onto to their stocks into the worst part of the bear market, if indeed the January top in stocks marked the end of the long bull market.

By one measure, investors know that the S&P 500 had already suffered at least a minimum bear market because in June, the index had declined 25% from its January all-time high. Of course, a 20% decline is widely considered to be the "official" entry into a bear market.

Since June 17, however, the index has rallied.

The question is: Is the bear market over, or is the price climb since June 17 a countertrend rally in a bigger bear market?

Well, if indeed the rally is countertrend, the August 1 U.S. Short Term Update provided a clue on how to possibly ascertain the end of the rally:

Oftentimes, rallies will end with an inter-index non-confirmation, where one or more stock index will fail to confirm the final rally high in the other indexes.

We show you where the various related indexes are right now in relation to each other in our publications. We also show what the Elliott wave model is revealing about the price pattern of the main indexes.

The whole idea is to make sure you're among the 1.5% of investors who are on the sidelines if a bigger bear market has yet to unfold.

The Elliott Wave Theorist, Elliott Wave Financial Forecast and U.S. Short Term Update make up our flagship Financial Forecast Service.

Learn how you can access our latest analysis of the U.S. stock market, as well as bonds, gold, silver and the U.S. dollar, by following the link below.

New Books to Protect You from the Bear

People are asking, "How can I get safe, fast?"

Our Crash Protection Package gives you tools you can use now.

  • NEW Last Call shows you the magnitude of the stock market top, so you understand what the world is facing.
  • NEW Forecast for the Bear shows you how the bear market will play out, so you can strategize.
  • The updated NYT bestseller Conquer the Crash shows you how we think you should position yourself – from mortgage to bank to stocks to gold to citizenship – so you can survive and prosper.

All three ebooks are written by Robert Prechter. And all are free and available instantly when you subscribe to our flagship Financial Forecast Service.

You’ll save the price of the books -- $167 -- and, possibly, your financial future.

Bitcoin: Elliott Wave Analysis Versus Wild Predictions

Opinions about financial markets -- even from professionals -- can widely vary. Such is the case with Bitcoin. Learn how Elliott wave analysis can put the cryptocurrency's price action into perspective.

Video Mood Riffs: Homers, Strike Outs & A House of Mouse Reboot

2022 featured a big top in the Dow Jones Industrial Average and some big-time performances on the baseball diamond. Discover how trends in baseball ebb and flow with trends in stock prices, plus see what could be in the cards for Disney during Bob Iger's second stint as CEO, in the latest installment of Video Mood Riffs.

Even Higher Inflation? Hmm … Maybe Not

Some observers say that high inflation will be with us for a considerable time longer. But the evidence suggests that this view might be off the mark. Here are some key insights.