Stocks Bear Market and Dow Theory Update

By: Tim_Wood

The primary bearish trend change that occurred on November 21, 2007 still remains intact in accordance with classical Dow theory. However, in accordance with my cycles work the March low was indeed expected and my model immediately triggered a short-term buy signal that quickly evolved to the point at which an intermediate-term buy signal was also triggered. Thus, we have a cyclical advance within the context of an ongoing primary bear market.

I know from some of the e-mails I'm receiving and from some of the reports I'm hearing that there is talk that the “Messiah” has finally saved the markets. According to my longer-term cyclical and trend quantification work, this is not very likely. It is my opinion that all the “Messiah” has done is to further destroy the free markets and the dollar. All the while we are seeing false hopes and optimism that will ultimately only serve to suck the public back for another slaughter. I have maintained, since the blatant manipulation to resurrect the markets back in 2002, that these efforts will ultimately only make matters worse and that has indeed been the case.

The even more aggressive efforts that we are seeing now are no different. It's kind of like giving drugs to a junky. At first they only need a small amount. But, in a short amount of time they become addicted and become reliant on the drug. Over time, they then need more and more drug to satisfy their fix and when there is no drug the withdrawals become more and more severe, which in turn requires more and more drug. All the “Messiah” has done is give our junky economy more and more drug. In the end, if the drug addict doesn't get dried out he eventually overdoses and dies. That is where our credit saturated economy is headed and to think that throwing more of the same drug at the addict will cure him is a joke. You have been warned.

In the meantime, I'm being asked, how long will this rally last? The answer to this is actually quite simple. In my world, this rally will continue to advance until my intermediate-term Cycle Turn Indicator confirms a top. To say that this will occur next week or next month or in 3 months would be a bit on the bold side. Anyone that tells you they have such an answer it wrong because the reality is, they don't know exactly. I have learned to let the statistics and cycles help me to anticipate the phasing in which turns are probable, but ultimately it is the intermediate-term Cycle Turn Indicator that identifies the appropriate turns. In the meantime, all I can tell you is that based on the statistics the bear market is not over and that this is a bear market rally.

From a Dow theory perspective, it too is currently in agreement in that the bearish primary trend was last reconfirmed by both averages with the joint closing lows seen on March 9 th . The old time Dow theorists wrote that once the trend was established, as was the case on November 21, 2007, that trend is considered to still be in force until it is authoritatively reversed in accordance with Dow theory. To date, that has not occurred. Also in accordance with classical Dow theory, any price action between a secondary high point and secondary low point is of no forecasting value. In the current case, price is still operating within the boundaries of the last secondary high and low points. The current Dow theory chart can be found below.

I have begun doing free Friday market commentary that is available at www.cyclesman.info/Articles.htm so please begin joining me there. Should you be interested in more in depth analysis that provides intermediate-term turn points utilizing the Cycle Turn Indicator, which has done a fabulous job, on stock market, the dollar, bonds, gold, silver, oil, gasoline, and more, those details are available in the monthly research letter and short-term updates. We have called every turn in commodities, the dollar and the stock market. I have covering the details as to what's next with the stock market, the dollar and commodities with the latest in the October research letter and the short-term updates. Don't be fooled by the hype. A subscription includes access to the monthly issues of Cycles News & Views covering the Dow theory, and very detailed statistical based analysis plus updates 3 times a week. Also see www.cyclesman.info/testimonials.htm

By Tim Wood
Cyclesman.com

© 2009 Cycles News & Views; All Rights Reserved
Tim Wood specialises in Dow Theory and Cycles Analysis - Should you be interested in analysis that provides intermediate-term turn points utilizing the Cycle Turn Indicator as well as coverage on the Dow theory, other price quantification methods and all the statistical data surrounding the 4-year cycle, then please visit www.cyclesman.com for more details. A subscription includes access to the monthly issues of Cycles News & Views covering the stock market, the dollar, bonds and gold. I also cover other areas of interest at important turn points such as gasoline, oil, silver, the XAU and recently I have even covered corn. I also provide updates 3 times a week plus additional weekend updates on the Cycle Turn Indicator on most all areas of concern. I also give specific expectations for turn points of the short, intermediate and longer-term cycles based on historical quantification.

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