{"id":3438,"date":"2009-08-21T09:19:36","date_gmt":"2009-08-21T14:19:36","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=3438"},"modified":"2009-08-21T09:19:36","modified_gmt":"2009-08-21T14:19:36","slug":"the-bounce-is-aging-but-the-depression-is-young","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/08\/21\/the-bounce-is-aging-but-the-depression-is-young\/","title":{"rendered":"The Bounce Is Aging, But The Depression Is Young"},"content":{"rendered":"

By Bob Prechter<\/strong><\/p>\n

The following is an excerpt from Robert Prechter’s Elliott Wave Theorist<\/em>.\u00a0 Elliott Wave International is \t\t\t\t\t currently offering Bob’s recent Elliott \t\t\t\t\t Wave Theorist<\/a><\/em>,<\/strong> free.<\/p>\n

On February 23, EWT called for the S&P to bottom in the 600s and then begin a sharp rally, \t\t\t\t\t the biggest since the 2007 high. The S&P bottomed at 667 on March 6. Then the stock market and commodities went almost straight up for three months as the dollar fell.<\/p>\n

On March 18, Treasury bonds had their biggest up day ever, thanks to the Fed\u2019s initiating its T-bond buying program. The next day, EWT reiterated our bearish stance on Treasury bonds. T-bond futures declined relentlessly from the previous day\u2019s high at 130-15 to a low of 111-21 on June 11.<\/p>\n

That\u2019s when there were indications of impending trend changes. The June 11 issue called for interim tops in stocks, metals and oil and a temporary bottom in the dollar. The Dow topped that day and fell nearly 800 points; silver reversed and fell from $16 to $12.45; gold slid about $90; and oil, which had just doubled, reversed and fell from $73.38 to $58.32. The dollar simultaneously rallied and traced out a triangle for wave 4. Bonds bounced as well. As far as I can tell, our scenarios at all degrees are all on track.<\/p>\n

Corrective patterns can be complex, so we should hesitate to be too specific about the shape this bear market rally will take. But from lows on July 8 (intraday) and 10 (close), the stock market may have begun the second phase of advance that will fulfill our ideal scenario for a three-wave (up-down-up) rally. In concert with rising stocks, bonds have started another declining wave, and the dollar appears to have turned down in wave 5 (see chart in the June issue), heading toward its final low. Although commodities should bounce, their wave patterns suggest that many key commodities will fail to make new highs this year in this second and final phase of partial recovery in the overall financial markets.<\/p>\n

Meanwhile, our forecast for a change in people\u2019s attitudes \t\t\t\t\t to a less pessimistic outlook is proceeding apace. Here are some of the reports evidencing this change:<\/p>\n

More than 90 percent of economists predict the recession will end this year. [The] vast \t\t\t\t\t majority pick 3rd quarter as the time. (AP, 5\/27)
\nManufacturing and housing reports this week may offer signs that the recession-stricken U.S. economy is \t\t\t\t\t within months of hitting bottom, economists said.\u00a0(USA, 6\/15)<\/p>\n

Fewer people say they\u2019ve prospered over the past year than in decades, a USA TODAY\/Gallup Poll finds. Over the past two months, however, expectations for the future have brightened significantly amid rising optimism about a stock market rebound and economic turnaround. \u201cI think the administration is going in the right direction,\u201d says\u2026 Now 36% of those surveyed in the Gallup-Healthways well-being poll say the economy is getting better. That\u2019s not exactly head-over-heels exuberance, but it is double the number who felt that way at the beginning of the year and a notable spike in the nation\u2019s frame of mind. Thirty-three percent say they\u2019re satisfied with the way things are going in the United States; in January, just 13% did. (USA, 6\/23\/09)<\/p><\/blockquote>\n

If only to confirm the socionomic causality at work, an economist quoted in the article above muses, \u201cThe one anomaly in the puzzle is that people shouldn\u2019t be feeling better because the jobs market is so terrible and unemployment is likely to keep rising.\u201d Of course it would be an anomaly, and people should not feel better, if mood were exogenously caused. But it is endogenously regulated, and it precedes social actions, which produce events such as job creation and elimination. That people feel better is evident in our rising sociometer, the stock market. If the rally continues, economists will soon agree that the Fed\u2019s \u201cquantitative easing\u201d and Congress\u2019 massive spending are \u201cworking.\u201d Those predicting more inflation and hyperinflation will have the last seeming confirmation of their opinions. Then, a few months from now, some economists will probably express similar puzzlement when the stock market starts plummeting again despite the fact that the economy has improved.<\/p>\n

But all of these considerations are temporary. Conditions are relative, and behind the scenes, the depression has \t\t\t\t\t been, and still is, grinding away.<\/p>\n

For more information, download the FREE 10-page issue of Bob Prechter\u2019s recent Elliott \t\t\t\t\t Wave Theorist<\/a><\/strong>.<\/em> It challenges current recovery hype with hard facts, independent analysis, and insightful charts. \t\t\t\t\t You\u2019ll \t\t\t\t\t find out why the worst is NOT over and what you can do to safeguard your financial future.<\/p>\n

Robert Prechter, Chartered Market Technician, is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash<\/a><\/strong> and Elliott Wave Principle<\/a><\/strong> and editor of The Elliott Wave Theorist<\/a><\/strong> monthly market letter since 1979.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

By Bob Prechter – Corrective patterns can be complex, so we should hesitate to be too specific about the shape this bear market rally will take…<\/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-3438","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/3438","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=3438"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/3438\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=3438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=3438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=3438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}