For those that have followed me through the years, you would likely remember at least one of the many major market directional calls we have made in many different markets through the years. And, while this list is clearly not all-inclusive, it does represent some of the market calls recently cited by our clients as the ones that most stick out in their memories:
- December 2015: Called for a major bottom in gold the night we struck the bottom, despite the market turning extremely bearish at the time and expecting a break down below $1,000. - March 2020: Called for a major market bottom at 2200SPX, with an expectation of a rally to at least 4000SPX. Market bottomed within 8 points of our target.
This leads me to the issue I want to address this week, which is a much bigger picture discussion than you normally see from me. Second, once we are in a confirmed long-term bear market, I will not be able to ascertain whether it will last as long as two decades until we are approximately 6-9 years into the bear market.
Yet, what about my view on the potential that this can take us as long as two decades? Are you going to assume it cannot happen simply because it has not happened in modern times? Are you viewing the market from a purely linear perspective? Do financial markets move linearly? For those of you that do not understand this quote, Elliott was predicting the start of a 70-year bull market in the face of World War II raging around him. Quite an amazing prediction, even if he was off by a decade. Still, if we do top out in the coming several years, he would be approximately 88% accurate in his prognostication. I have personally never seen a market prognostication in my lifetime that has been anywhere near as amazing as Elliott's back in 1941.
So, when taking all these factors into consideration, I think it is reasonable to expect that, once we complete wave [III] in the coming several years, we will usher in a long and drawn-out bear market in wave [IV], which is the same wave degree as the wave [II] which ushered in the Great Depression. Maybe we need to expect the Greater Depression based upon these expectations. . .
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