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Bob Prechter: Bear Market Rally Is Over, Stocks Headed For New Lows

Posted Nov 05, 2009 01:50pm EST by Peter Gorenstein in Investing, Recession

With the Dow Jones Industrial Average once again marching closer to 10,000, many investors, especially those who missed the rally since March, must be asking themselves: Is now the time to finally pull the trigger?

Robert Prechter, founder of Elliott Wave International, implores retail investors stay away… for now. Prechter, who was bullish near the lows in March, now says the stock market "is in a topping area."

Why?

Several factors:

  • Slowdown in upside momentum. Recent intraday rallies are petering out before the close.
  • Bullish Sentiment. Investors who were bearish near the lows, are now just as bullish after a 60% run in the S&P 500. To Prechter, "that's a dangerous place to be."
  • General overvaluation of stocks.

Prechter, the author of Conquer the Crash, says this is akin to the market in 1966-74 or 1929-32, where massive bear rallies gave way to another "big leg down."

He's predicting another crash in 2010 that will bring stocks below this year's low. His word to the wise, "be patient, don't rush it" keep your money in cash and cash equivalents for now and wait out this bear market.

He thinks it'll be another 5 or so years before we turn the corner but the good news is when we do, it'll be the buying opportunity of a lifetime.

223 Comments

- Thursday November 05, 2009 01:53PM EST

History does tend to repeat itself.

- Thursday November 05, 2009 01:57PM EST

Thanks

- Thursday November 05, 2009 01:58PM EST

I don't believe it,..I DON"T BELIEVE IT....the market is INSANE. I am baffled as how it got this far and how high it is. This is NUTS or I am NUTS.? Has everyone in this stock market gone crazy??? Data says this is the biggest most insane bubbles in history....but no one cares.....

Yahoo! Finance User
Yahoo! Finance User - Thursday November 05, 2009 02:02PM EST

Bank credit is deflating! March rally is coming to an end. Learn why! Bob Prechter's latest newletter is free: http://www.tradingstocks.net/html/latest_opinion.html

Yahoo! Finance User
Yahoo! Finance User - Thursday November 05, 2009 02:05PM EST

Such optimism. I'll start buying when the P/E's are close to 500. As you can tell I'm a Talented and Gifted Trader.

Yahoo! Finance User
Yahoo! Finance User - Thursday November 05, 2009 02:05PM EST

This is a deflationary crash! Prechter predicted it years ago! He described how it would unfold. He recommended short at 2007 top, recommended short cover end of February and said bottom would be around March 10! Then he went on to say a big rally would make DOW 10000! His book is a must read! http://www.tradingstocks.net/html/prepare_for_market_crash.html

- Thursday November 05, 2009 02:05PM EST

Helga, Helga, the people pumping up this market are the banks and fund managers. When it all comes crashing down it won't matter because goverment will bail them out. The banks and Wall Street have learned to take as much risk as they want and can suck up as much money as they can so they too will be 'too big to fail'. They win and we pay.

Yahoo! Finance User
Yahoo! Finance User - Thursday November 05, 2009 02:05PM EST

Do you think that Aaron keeps having all these bears on TT is because he missed the entire rally!? Moron.

- Thursday November 05, 2009 02:05PM EST

I've always believed in the 17 year cycle. Just look at the Dow since the depression and you can see for yourself. This guy has my vote!

- Thursday November 05, 2009 02:06PM EST

It is time to wait, at least 15 days.......

- Thursday November 05, 2009 02:06PM EST

Awesome...5 years will be just in time for another Republican to come in and F it all up again.

- Thursday November 05, 2009 02:08PM EST

The leg down will be sooner than later next year

Yahoo! Finance User
Yahoo! Finance User - Thursday November 05, 2009 02:15PM EST

Should the title not say "BULL" Market is over? Not "Bob Prechter: Bear Market Rally Is Over, Stocks Headed For New Lows"

- Thursday November 05, 2009 02:15PM EST

False. History does NOT repeat itself. Bernanke is not an idiot.

- Thursday November 05, 2009 02:16PM EST

False. History does NOT repeat itself. Bernanke is not an idiot.

- Thursday November 05, 2009 02:19PM EST

No, Helga, you aren't nuts. Scary-looking, maybe, but not nuts. We're currently building another house of cards with barrowed and printed money, and few people seem to mind because, hey, the markets are going up. I dont even recognize this country anymore. Our leaders and unelected officials routinely thumb their noses at the Constitution. Where did Bush, Obama, Paulsen, Timmy, and Bernie-Baby get the authority to MAKE banks take our taxpayer dollars, control private sector salaries, takeover companies, all the while not disclosing how our money is currently being used to prop up the banks and economy?? Please enlighten me, anyone of you self-professed socialists and/or progressives. Show me in the Constitution where such powers are granted to Congress or the Executive Branch. Many of our freedom-loving ancestors bled, died, and suffered during the Revolutionary War for our Nation to turn out like this??? God forbid.

- Thursday November 05, 2009 02:20PM EST

Don't be nice to people who ruin others!!!!!!!! This idiot predicted a crash in 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009. He is really #%^^$. His trick is to say rational things that seem to make sense and then make a prediction but he doesn't understand that the stock market, tullips etc. is NOT rational and that his elliotbathe bullshit doesn't work, he knows this but he won't admit it. WHAT IS HIS TRACK RECORD? Anybody? You? You? It is not published?????? What a surprise...........

- Thursday November 05, 2009 02:21PM EST

Yeah right trentr, get a clue. Are you talking about Jimmy 'malaise' Carter who gave us 13% unemployment, 21% interest rates and looong gas lines?

- Thursday November 05, 2009 02:22PM EST

What a bunch of crap. I actually agree with his conclusions, for fundamental reasons. But to rely on lines on paper from the past to predict the future is no better than reading the entrails of a sacrificial goat.

Yahoo! Finance User
Yahoo! Finance User - Thursday November 05, 2009 02:25PM EST

Listen to me, my brothers and sisters; hear the testimony of others before you who have prospered greatly through KEEPING THE FAITH. (Hugs all around for the handful of creeps at the top of the pyramid.) Join us, brothers and sisters….

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