Tuesday is a clear example of how
dangerous Bear Markets are. We believe we are inside a several month stock
market crash. We are deeply oversold in several indicators, and have our eyes
open for a corrective rebound. In the nastiest of Bear markets, crashes can
occur under deep oversold conditions. It is amazing how slow Bernanke's Fed is
to reduce interest rates. We know why, because he is fully aware of the
hyperinflation going on, and the Princeton textbook says a Fed Chairman should
tighten during hyperinflation periods. I wonder how much longer he can delay
before Wall Street's money center banks demand his scalp. Whether he likes it or
not, we are going to see more hyperinflation, or a depression. He'll eventually
pull the trigger and accept hyperinflation. Tuesday was another 90 percent down
day, which suggests this market is either seeing selling exhaustion, or Niagara
falls is about to occur. Our belief is that markets are inside the final small
degree wave of decline that will result in a temporary bottom around our
phi mate turn date of January 18th +/- a few days. Our EW charts reflect
this tonight. The coming rally is likely a wave 2
bounce,
which will last a few weeks, and set up perhaps the worst fall of this six month
Bear market.
The Dow Industrials fell 277.04
points Tuesday, closing at 12,501.11.
NYSE volume was higher on the decline, at 106 percent of its 10
day average, with downside volume leading at 93 percent, with declining issues
at 81 percent, with downside points at 98 percent.
The
VIX continues to bother us. It is calling for a stock market plunge, maybe as
bad as a crash, starting over the next month or so. Before that event, the VIX
symmetrical triangle is suggesting we should see a rally that takes the VIX to
around the 20.00 level. That would be where the next huge decline would begin.
Perhaps that rally starts at our coming phi mate turn date, lasts a few weeks,
then ouch.
Best
regards,
Robert McHugh,
Ph.D.