Robert Prechter of "Elliot Wave" fame was interviewed by Bloomberg Radio's Tom Keene this morning and was maintaining a "wait and see" attitude. (Prechter always seems to hit the airwaves during high volatility periods).
His basic message was that we have been in a bear market rally since March 2009 lows, not truly justified by economic growth and largely fueled by fiscal stimulus programs. He did not have particularly kind words for the Fed, feeling it should be "abolished".
Prechter first garnered attention in 1987 for "calling the crash", although he has since had major calls which totally were off the mark, like essentially missing the bull run of the 1990's. He claims to have taken clients long shortly after March 2009.
Elliot Wave theory dates back to the 1930's and is best known for its five-wave structure of the market, which has many true believers. However, interpretations can vary widely depending on who is doing the analysis and the timeframes used, among many other factors.
"Part of the proof that it’s a bear-market rally is the fact that the economy has really stayed in the dumps,” Prechter said today in the radio interview on “Bloomberg Surveillance”. “Mostly we’re in cash. The only other things I recommended recently were bear funds and short sales,” he said. “I’m staying completely safe right now.”
"We’re quite oversold, everybody knows that,” Prechter said. “But we’re not at the kind of readings that would prompt me to come out as in early 2009 and say it’s an opportunity.”
S&P 500 - Last 12 Months
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Comments
Great articles. Thank you for the insights. www.jimfrancisblog.com
This may be the first credible thing Prechter has had to say in years. I think he was predicting dow 1000 for 10 years while the market continued to rise.