Prechter: Between Now and May is 3rd Best Selling Opportunity Since 2000

Robert Prechter of Elliott Wave International thinks between now and May is the 3rd best selling opportunity to sell stocks over the past 10 years.  First in 2000, second in late 2007 and third "between now and a few weeks from now".  What do you think, will there be a third wave down from the 2007 peak (Wave C)?  Prechter thinks we're in for another deflationary episode, even after the trillion in stimulus.
"I think you can short just about everything, somewhere between now and May we're going to have a real rollover. Think about this progression. In October the bond market topped out. In November the Dollar bottomed. In December Gold and Silver and the utilities average, go figure that one, topped out. In January the CRB Index of commodities topped out. The US stock market is the last domino holding up. The best trade on the board, the one I've been bullish on for the past six months has been the US Dollar....."

For more watch the full interview below or find it through Bloomberg Video.
Deflation Wave vs. Printing Press



For recent posts with Prechter/Elliott Wave click here.

Comments

  1. This "fear of deflation" is largely nonsensical. Deflation does not keep people from spending – they always spend what's necessary. And money NOT "spent" is then saved which means it is credit to someone who invests it for capital goods etc. thus it is again being spent, only not for consumption. Money never lies completely idle to any extent whether there's inflation, deflation, stability or a solar eclipse. For deflation to seriously happen, not only the current extreme credit expansion by the central banks and states (through "quantitative easing", stimulus packages, monetising and then spending national debt etc.) but also the money that was released into the economy PRIOR to the collapse would have to be "mopped up" again. This is nowhere to be seen nor would it be technically possible (confiscation aside) so we will rather see inflation than deflation.

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  2. Right, in fiat fairytale land you can't have a 30s style liquidity trap. You do have a lot of Minsky moments however...

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  3. True, well, all of this money could be flowing through that USO resistance level. I'm watching oil here.

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  4. About 95% of the nation's "money" exists only in the minds of the bankers and of the consumers, because of electronic ledger entries creating lines of credit. This includes demand savings accounts. Since we are leveraged 20:1, a series of defaults can, in theory, cause 95% of our money supply to vanish as if by magic. That is deflation.

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  5. I fully agree with Prechter. This is a huge upward wedge triangle with decling volume during the entire upward move. I see stocks going way way down under 6500 on the Dow. As far as Gold, I am a buyer on all dips.

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  6. Thanks for replying. the scenario you depict, if it happened, would be deflationary no doubt. However, if I understand the lender of the last resort right shouting from the helicopter he equally will with a keystroke more than reflate. This is all tangled and (I am preparing another post looking more deeply into this - no doubt this needs to be addressed and prepared for.

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  7. Do you think there is any similarity between the US today and Japan in 1998 that David Rosenberg speaks about? Japan Debt/GDP = 10% back then. See this post Jim Grant and David Rosenberg Debate Treasury Bond Yields (Video Link from 3/23/2010) http://www.distressedvolatility.com/2010/04/jim-grant-and-david-rosenberg-debate.html

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  8. Thank you for your response. One possible problem might be that the velocity of money flow would go to zero during a free-fall. I am not trying to push any particular viewpoint as an ideology--I just feel like someone helplessly watching a train wreck as it unfolds.

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  9. Money printing would be the last resort - if it were that simple Japan would have done this a long time ago - it would be political suicide

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  10. The "fear of deflation" is the action taken by governments that you cite; they are the opposite actions of what governments would do if they feared inflation.

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  11. oh...didn't notice the time stamps. I thought this was a new post.

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  12. Are you a financial duffer, an economist, a professor, a government agent or a GM employee?

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