Two Ways: Sounding the Bear Alarm
Renowned technician Robert Prechter
is sounding the bear alarm: He warns that the current rally isn’t sustainable,
and that the S&P 500 index could drop to half its March lows.
According to Reuters, Prechter, who correctly forecasted the 1987 stock
market crash, stamped out the “green shoots” statement
recently put forth by Fed Chairman Ben Bernanke.
“It’s not the start of a new bull market,” Prechter, chief executive of
research firm Elliott Wave International, said. “Our models are (showing) right
now that it is a much bigger bear market than most people realize, something
along the lines of 1929-1932.”
Prechter continued to describe the current scenario as a very rare event, and
said he expects another leg down in stocks
to possibly be as severe, if not more severe, than the declines suffered in
2008 and 2009.
“Deflation is coming,” he said. “We’re not at the bottom yet… I think we are
going to have bouts of deflation separated by recoveries.”
For another look at the economy,
see Professor Satyajit Das’ The
End of American Financial Dominance?