On April 17, the U.S. stock indexes finished their sixth straight UP week in a row. Final tally: From its 12-year low on March 9, the Dow Jones Industrial Average had rocketed 24%, while the S&P 500 scored a 28% gain in the same period.
The winning streak obviously led the better part of planet Earth to ask one single question: IS the final bottom in for stocks?
Yet it would take a Yoda-speaking interpreter to decipher an answer out of all the doubletalk from mainstream experts. This quote from an April 18
New York Times is more than enough:
"The rally could qualify as the start of a new bull market. BUT, we need to see some of the volatility subside before a sustained rally could ignite. The good news is that it's already starting to happen. Yet, short-term forecasts for first-quarter profits are pretty bleak. BUT we have a low bar to hurdle" (emphasis added).
Here's the thing. Asking whether the run-up in stocks is a Bear rally, or Bull beginning is the wrong question. In the end, "Definitions" are way less important than "Directions." The main thing is to get on the right side of the trend, BEFORE it unfolds.
Technically speaking, a rally of more than 20% is NOT a telling signal, either way. In the
newly released April 18, 2009 Elliott Wave Theorist, Elliott Wave International president Bob Prechter presents the following close-up of the Dow Jones Industrial Average during the dominant years of the Great Depression.
As you can see, the Dow endured a series of powerful surges all along its 90% plunge in value.
The context of today's market is quite similar: Bear or Bull, the key is to stay in front of the most critical trend changes. This is what our analysts have done, as the following archive shows:
"Aggressive speculators should return to a fully leveraged short position now. We may be early by a couple of weeks, but the market has traced out the minimum expected rise, and that's enough to act on."
Soon after, as the DJIA neared its own historic October 11, 2007 apex, the October 9 and 10
Short Term Update amped up the urgency of its analysis and wrote:
“Odds have increased that a market high is in place. The structure, coupled with turns in the other markets, suggests a top is in place. The potential, at the least, is four a large selloff... Watch Out! The market faces a stout correction."
The 17-month sell-off that followed sends a powerful message.
As does our analyst's ability to identify the start of strong rebound at the markets' early March 2009 low. Here, the March 6 Short Term Update prepared subscribers for the bullish winds of change and wrote:
"The main indexes appear to be in the final up-down sequence, which, when complete should mark a [major] low."
Once the structure was complete, the March 16 Short Term Update confirmed the bull's identify and said:
"When the market speaks, it behooves us to listen. The top wave structure is the one we discussed, which at the time was the top alternate. The implications of this are that the... major stock indexes are in the initial stages of a [significant] advance."
Is our analysis always this on-target? Obviously not -- but the quotes and chart above speak for themselves. Ask the right questions, get the right answers. Click
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