Stock Market Prediction
News and events do not drive the markets. Social mood does. Social mood is declining since 2000. When the crowd turns from optimism to pessimism, it is first seen in stocks, and then the rest of the economy. We had the 2009 rally in the middle of bad news, bad earnings, and we topped in April with relatively good news. Recession was declared over well into the rally.
Now we are going to sell of first and a depression will be apparent later. It is going to be a single dip depression. We are still at the top in terms of market valuations. We did not see the bottom back in March 2009. The stock market bottom is going to look starkly different. People will hate stocks. These message boards will be empty. Ordinary people will not be interested in the stock market by the time bottom arrives!
http://www.kondratieffwavecycle.com/stock-market-big-picture/
We just left a major stock market top behind. This may not just be a double dip. It is possible that March lows will not hold. The bear market rally of 2009 was expected after over sold conditions. But now we are back into bubble territory and coming down. Debt is the problem and we have more of it now. Excessive debt is causing deflation. Nothing has been fixed. We have borrowed the stimulus and we have spent it. Now we are going to face a mountain of debt. Merely borrowing and spending money cannot make an economic recovery.
Back in March 2009, in the middle of bad news, bullish sentiment was only 3%. Virtually everyone was convinced that the stocks were going lower. But we found a bottom and rallied. Fast forward to one year later, by the end of April 2010 92% of traders were bullish. That is a 180 degree turn for the market sentiment. But that is what makes a market top! Everyone, including the mainstream media was convinced that stocks would go ever higher. People bet on the long side and started to wait to sell at higher prices to the the greater fool. But the last rally of the leg was visibly weak and the stock market technical indicators were ringing the bells that we were approaching a top:
2000 is the left shoulder, 2007 is the top, 2010 is the right shoulder. Crash is coming.