Question of the Week: 2/18/2011

Rather than a 4-6 year bear market staring Jan. 2008, is there a level on the S&P 500 that would indicate a new, bull market started March 2009?


Simply stated, the answer to your question is NO...such a level cannot be identified at this time. Why? The 4-6 year bear market (beginning January 2008) is a small piece of a much larger, 20-30 bear market starting September 2000. Consequently, even if the S&P made a new, all-time high this year, the rally off 2009's low would remain corrective. For that reason, the rally off 2009's low must (at some point) be retraced at least 61.8% BEFORE a new bull market is "allowed" to begin. In addition, since wave-C (beginning January 2008) is corrective, it must be part of a larger, ongoing formation, which means a D and E wave will unfold following the conclusion of wave-C. Combining wave structure implications with the above facts, I can confidently predict the S&P will spend 90% (or more) of the next 10-20 years gyrating between the highs and lows it has already established since January 2000.

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