On Being A Dimwit

There is no guarantee, no ultimate formula for success. It all comes down to intelligently and relentlessly seeking solutions that will increase your chances of prevailing. When you do that, the score will take care of itself.

—Bill Walsh, former Coach of the San Francisco 49ers

Bob Prechter’s report, The Elliott Wave Theorist published on Friday, March 15, made the case for a turn back down to resume the bear market within the next two trading days. His analysis included the following observations:

  1. Provided the rally since December 24th stops and reverses now, the form and time analogy from the presumed start of the current bear market, the drop into the first low, and the duration of the recovery move to an interim top matches the same form and sequence of the 1968 bear market: 84 days from the top to the first bottom, and 79 days to the reaction top, a total of 163 days, top to top.
  2. Several market indexes, including the S&P 500, the Major Market Index, and the New York Stock Exchange Composite have returned to their upper trendlines, which have provided strong resistance to further advance in the past.
  3. While long term sentiment figures have been extremely overbought for some time, short term sentiment among S&P futures traders have reached bullish extremes that are usually seen at important tops.

I note that not only have futures traders turned bullish, stock investors this past week flipped suddenly from being on balance sellers to recording one of the biggest net buying weeks in the last six months.

I also note that, at precisely the same time, I turned bullish myself, emailing my readers that I was altering my position, terming the advance since Christmas Eve an impulse wave will take the market to new highs:

So here I am, trained in the art of contrary opinion, joining the always-wrong-at-important-junctures crowd!

I would tell you that I’m embarrassed, but I’m not. It’s just hard to stick to your guns when the market is making you look like a fool. Now, it’s true that if the market does not turn down pretty soon, my change of opinion may turn out to be right. But, at the moment, I’m very uncomfortable to find myself in the company of the majority.



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