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Stock Market Report

U.S. Stocks Heading Lower To Complete Intermediate Wave 5 of Primary Wave 1

by Oliver Silverstein

January 12, 2009

Back in November I was looking for the bottom of intermediate wave 3 to be followed by a couple of months worth of rally for intermediate wave 4.

 

We got the Santa Claus/intermediate wave 4 rally as expected.

 

Now we've started down again. This decline (if my EW count is correct!) should be the final one to complete the entire primary wave 1 down that started at the high in October of 2007.

 

Please don't misunderstand what I just said. This unfolding decline will be the final decline of primary wave 1, not the final decline of the bear market.

 

Several weeks from now, when the decline has run its course, that will only be the end of primary wave 1 down. We will then have a year long rally for primary wave 2 up.

 

That will NOT be a new bull market.

 

It will be a bull rally within a very large bear market.

 

The rally could last a year, but that will not make it a new bull market.

 

The rally will be accompanied by great media fanfare that we are in a recovery.

 

Even so, it will not be a new bull market.

 

Tradable, yes, but the beginning of a new multi-year bull market, no.

 

For those of you who want to buy stocks, there will be some great deals to be had in a few weeks. You'll be able to make very nice gains on the upside, but don't buy stocks in a few weeks thinking you are going to hold for the long term.

 

Primary wave 2 will come to an end, and then we will have to deal with an horrific primary wave 3 down like you've never seen before.

 
 

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