{"id":21680,"date":"2011-06-14T18:31:51","date_gmt":"2011-06-14T22:31:51","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=21680"},"modified":"2011-06-14T18:31:51","modified_gmt":"2011-06-14T22:31:51","slug":"six-straight-weeks-of-decline-take-djia-below-12000-what-now","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/06\/14\/six-straight-weeks-of-decline-take-djia-below-12000-what-now\/","title":{"rendered":"Six Straight Weeks of Decline Take DJIA Below 12,000: What Now?"},"content":{"rendered":"<h3><span style=\"font-size: small;\">Before blaming falling stocks on the most recent weak economic reports, let&#8217;s check some dates <\/span><span style=\"font-size: small;\"> <\/span><\/h3>\n<h3><span style=\"font-size: small;\">By Elliott Wave International<\/span><\/h3>\n<p>As of June 10, the Dow has suffered the &#8220;longest losing                 streak since the fall of 2002. The market&#8217;s last seven-week stretch                 of losses began in May 2001, as the dot-com bubble deflated,&#8221; reports <em>The                 Associated Press<\/em>.<\/p>\n<p>As for why stocks are falling, most observers agree: Blame &#8220;weaker                 hiring, industrial output, and a moribund housing market.&#8221; The                 economic reports from the past two weeks made that clear.<\/p>\n<p>But wait a minute. The DJIA didn&#8217;t top in the past two weeks                 &#8212; it topped on April 29. At the time:<\/p>\n<ul type=\"disc\">\n<li>U.S. unemployment benefit applications had been trending                   down\/flattening. In fact, &#8220;The unemployment rate fell                   last month in more than 80% of the nation&#8217;s largest metro areas,&#8221; said                   an April 27 <em>AP<\/em> report.<\/li>\n<li>U.S. industrial output was up. In fact, &#8220;both the Philly                   and N.Y. Fed reports show[ed] improving manufacturing and business                   conditions.&#8221; (<em>Reuters<\/em>, April 15)<\/li>\n<li>As for the U.S. housing market, it officially entered the &#8220;double-dip                   recession&#8221; zone only on May 31, a month after the Dow&#8217;s                   April 29 peak.<\/li>\n<\/ul>\n<p>This is not to say that unemployment, manufacturing and real                   estate were peachy in April. But the worst of the reports from                   those areas of the economy only came <em>after the stock market                   had already entered the decline<\/em>. The most recent weak                   economic reports hardly explain why stocks topped <em>when<\/em> they                   did.<\/p>\n<p>If you&#8217;re looking for a better explanation, consider an Elliott                 wave perspective: The economy doesn&#8217;t lead the stock market &#8212; <em>it&#8217;s                 the stock market that leads the economy<\/em>.<\/p>\n<p>Skeptical? Then think back to 2007. &#8220;Goldilocks economy,&#8221; strong                 corporate earnings, unemployment at 4.4% &#8212; nothing but blue                 skies ahead. The Dow rallies to an all-time high above 14,000                 in October 2007 &#8212; and over the next 18 months goes on its biggest                 losing streak in 70+ years, falling 54% and ushering in  &#8220;the                 Great Recession.&#8221;<\/p>\n<p>Now fast forward to March 2009. The Dow has crashed below 6,500;                 unemployment has more than doubled; the desperate Fed has dropped                 interest rates to 0%; foreclosures; bailouts; consumer confidence                 at an all-time low; general state of near-panic. The Dow bottoms                 on March 6, 2009, and stages a powerful two-year rally above                 12,000.<\/p>\n<p>By conventional logic, you&#8217;d have to agree that, paradoxically, &#8220;the                 good economy&#8221; of 2007 prompted the deflationary crash, while &#8220;the                 bad economy&#8221; of 2009 sent stocks flying.<\/p>\n<p>But here&#8217;s an explanation that actually makes sense: Broad market                 trends are not created by the economic conditions &#8212; social mood                 is what creates them. Social mood doesn&#8217;t depend on what Ben                 Bernanke had for breakfast &#8212; it changes for endogenous reasons,                 and those changes follow the Elliott wave model. Stocks lead                 the economy because they are quicker to register changes in social                 mood.<\/p>\n<p>Before you make investment decisions based on the latest economic                 report, be sure to read the <span style=\"text-decoration: underline;\"><strong><a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=9cp&amp;rcn=aa188&amp;dy=aa061411&amp;url=http:\/\/www.elliottwave.com\/iie\/iiebook_b.aspx?code=29982%26articleid=2272\">2011                 edition of <em>The Independent Investor<\/em> eBook<\/a><\/strong><\/span> by                 Elliott Wave International. You will see example after example                 of the fallacy to the belief that economic conditions direct                 the moves in the stock market. \u00a0<span style=\"text-decoration: underline;\"><a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=9cp&amp;rcn=aa188&amp;dy=aa061411&amp;url=http:\/\/www.elliottwave.com\/iie\/iiebook_b.aspx?code=29982%26articleid=2272\">Download                 your free 50-page Independent Investor eBook now<\/a>.<\/span><\/p>\n<div>\n<p><em>This                     article was syndicated by Elliott Wave International and                     was originally published under the headline <a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=9cp&amp;rcn=aa188&amp;dy=aa061411&amp;url=http:\/\/www.elliottwave.com\/freeupdates\/archives\/2011\/06\/10\/Six-Straight-Weeks-of-Decline-Take-DJIA-Below-12,000-What-Now.aspx%26articleid=2272\"><strong>Six Straight Weeks of Decline Take DJIA Below 12,000: What Now?<\/strong><\/a>.                     EWI is the world&#8217;s largest market forecasting firm. Its staff                     of full-time analysts led by Chartered Market Technician                     Robert Prechter provides 24-hour-a-day market analysis to                 institutional and private investors around the world.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>As of June 10, the Dow has suffered the &#8220;longest losing streak since the fall of 2002. The market&#8217;s last seven-week stretch of losses began in May 2001, as the dot-com bubble deflated,&#8221; reports The Associated Press.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-21680","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/21680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=21680"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/21680\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=21680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=21680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=21680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}