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Stock Markets Crash Back to Bear Market Lows-Yorba TV Show

Stock-Markets / Financial Crash Oct 28, 2008 - 01:45 PM GMT

By: Anthony_Cherniawski

Stock-Markets Diamond Rated - Best Financial Markets Analysis ArticleGot your seatbelt and crash helmet on?  After a hair raising rally this morning, the markets have reversed back down to test the lows.  The SPX came within 6 points of making a new low in October this morning.  I would not be surprised to see a much lower SPX by the end of the day.  What amazes me is that he bullish sentiment published by the American Association of Individual Investors is well over 50% for small investors.  In other words, a lot of investors are getting sucked back into the market too soon, trying to pick a bottom.   


Let's review the pennant formation today.  The first thing you'll notice is the flagpole from the upper left, which ends in a triangle shaped formation or pennant.  This is not an Elliott Wave Triangle, which has only moderately bearish implications.  Elliott measures the target of the triangle by the width at its widest spot, which, by the way, in the DJIA is approximately 2000 points or 25%.  That would give us a target of approximately 6600.  The Pennant formation uses the length of the flagpole as its target, which is 3700 points in length, giving the pennant target of approximately 4900, or a potential decline of 43%.

The SPX Elliott Triangle target would be approximately 690, a mere 23% decline from its pivot.  I wish it were correct.  Instead, the pennant target has the potential to take the SPX to 468, a mere 47.5% from yesterday's pivot point of 893.      

Let me warn you that the odds of reaching or exceeding these targets in the DJIA and the SPX is 62%.  Even the most aggressive speculators should take profits early and often, so that you don't get caught in the rebound, which will also be fierce.  I suggest using the Elliott Wave targets as the first profit-taking point, with possibly 50% of your investment taken off the table.  At a 30-35% decline, take another 50%.  You are on your own for the last profit taking point.  Don't hold out for the last dime because these markets have a name for speculators who don't know when to get out.  It's called snacktime!

Briefly, gold is still in decline.  We just got a sell signal with a target of 640 or below.  I suspect that this will be a short term los with a fairly substantial rally to 720-740.  The final decline by the end of the year suggests a minimum target of 550 and a high probability low below 500.

West Texas Crude has a near-term bottom of at least 51.  My model suggests oil will be at $40 per barrel by the end of the year. 

This week's show on www.yorba.tv is packed with information about the direction of the markets. I'm on every Tuesday at 4:00 pm EDT . You can find the archives of my latest programs by clicking here .

Please make an appointment to discuss our investment strategies by calling Claire or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski,
President and CIO
http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

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