Neely

 NEOWAVE: Possible Change in Structure of 4-year Bear Market

In January 2008, I warned customers and the public that a massive, new bear market was underway. That bear market unfolded almost exactly as originally predicted on both a price and time basis. It seemed almost impossible, at the time, the U.S. stock market would experience a 50%+ decline in less than a year, but that was what NEoWave theory told me and that is what occurred.

As I have said many times in the past, as a market moves toward the center of a large, complex corrective formation, predictability becomes more and more difficult. It usually reaches the point where you can;t predict what will occur next, confusion is high, inaccurate forecasts are common, everyone is looking for answers (when few are possible) and a level of public agitation or irritation is obvious.

That point of confusion is exactly where the S&P is right now. After a year of extremely accurate market forecasts (I was in Timer Digest's Top 10 repeatedly the last 12 months), the S&P is now in the dead center of a 15-20 year, complex correction that began September 2000. Until the S&P moves far from this part of its structure, I will (at best) be able to predict general market direction, but not specific day-to-day behavior. This same phenomenon occurred from 2004 to 2006 when I knew a "bull market" was underway, but I could not predict, with wave theory, exactly how it would unfold.

The continuing rally in the S&P has forced me to reconsider the design of the bear market from January 2008. Initially, I thought it would be a complex correction that pushed to new lows at least once more before the lowest point of this 20 year bear market was reached. But, recent action brings into question that assumption and raises new possibilities. For that reason, I went back to my S&P archives and looked up the various scenarios I originally created for the 4+ year bear market starting January 2008. Attached is one of those scenarios that still explains the past, fits current evidence and explains the magnitude of the rally off 2009's low. If correct, the 2008 to 2012+ time frame is a contracting Triangle that will eventually end much higher than 2009's low. It also means 2009's low will not be broken for the next 50 years!

This feels eerily like my call in 1988, just 8 months after the 1987 crash low, when I was the only wave analyst in the world predicting 1987's low would never be broken for the rest of my life. The count attached to this email is not yet my "official" wave count, but it is quickly becoming a serious choice. Over the next few weeks it should become more obvious the path this phase of the 20-year bear market will follow.

Enjoy,
Glenn Neely