Whilst nothing is certain, market analysts I have followed since 1995 assign a high probability to more downside movement of stock markets the world over, quite a lot more, as we are at the end of the first stages of the beginning of a multi-decade decline in man's optimism, reflected in stock averages.
Using the DJIA as a benchmark, January 2000 marks the conventional all-time bull market high. A two year cyclical bear market followed, drawing down to the 2002 low. A six year cyclical bull market spanning 2002-2007 then moved markets up worldwide. Yet the larger trend down reasserted itself circa October 2007.
That impulsive move down has not ended. However, internal dynamics show near term ending of the current short-term bounce from the recent October 10, 2008 low (one year out from the Oct 2007 high).
When the bounce has ended, more downside movement will take out the October 10, 2008 low. The target with the break is below 7200.
The break to 7200 will be short and sharp. It will also be the end of the drop from October 2007, the DJIA's all-time high in points. Being the end of such a large move will provide a rallying point for the market to retrace these massive losses, before we begin another impulsive move down of an order that will dwarf the run down to October 10 low (which caused the world to panic).
Even this will not be the end of the bear market.
Markets move from mass optimism to mass pessimism and back again in cycles that are complex but defined by wave-like structures. Arguing with the market is arguing with mass psychology, which has never once proved to be profitable.
What to do about all this is quite a challenge for all of us.
Near-term, the auto industry in the USA is about to be bankrupted with the loss of millions of jobs. Mass bankruptcy of domestic and international airlines will be close behind.
Last edited by 4PW's; 19th Nov 2008 at 01:22.