More Contrarian Chatter That a Rally Is Imminent

On Monday, it was Dr. Marc Faber who noted that equity markets may rally "soon". Bloomberg reports that Robert Prechter of Elliot Wave International thinks that it would be a good idea to exit existing short positions and prepare for a rally.

Prechter, chief executive of the market forecasting firm, warned in this month’s ‘Elliott Wave Theorist’ that a rebound in stocks could be “sharp and scary” for anyone who is so-called short.
...
“This is an environment of escalating financial chaos,” wrote Prechter, who first shot to fame in the 1980s after cautioning investors that stocks would crash two weeks before Black Monday. “Our main job is to keep the money we have. If we exit now, we will do that.”
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“The market is compressed,” Prechter said in the note published yesterday. “When it finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than late.”

Better early than late is almost always an excellent idea and too few who take this route look past the difficulty in exiting positions they would have encountered, instead focusing on the gains they missed after not sticking around for the tippy-top.

As for Mr. Prechter's other advice, it's hard to take anything he says too seriously after proclaiming rather loudly about six or eight years ago that gold would never top $400 an ounce due to the coming "deflation".

Comments

[Big-P:]

I covered shorts on the 23rd and let the market bounce yesterday but I'm short again and will continue pounding these clowns over the coming hours.

Here's a hint for all of you bottom-pickers out there--

Watch the first week of March and prepare yourselves for the day Big-P "drops the clutch."

-Big-P

Feb 25 09:06 AM

[kelm:]

The "Idiot Wave" logo says it all.

I am much more concerned about the next leg down seeing catastrophic selling where all retail investors flee and everything collapses than a big rally at this point. We should have had a rally late last year after that loose-fire-hose Oct 10th 1000+ point Dow day but we didn't. This market has shown nothing but weakness which is leading me to believe that there s something fundamental that has changed in investor's minds about the market. It could well be that having ridden the internet bubble down less than a decade ago they are on their last legs.

The verbals I hear from people is a worry that the market can drop "all the way" and they lose everything. That is a dangerous mindset to have lurking out there.

Feb 25 09:55 AM

[Bill Jencks:]

So, with the financial crisis at full crunch, with OPEC shutting down oil refineries like crazy and reducing its oil reserves continuously to soon drive up the oil price, with the Chinese about to introduce the Yuan as the new reserve currency of Asia giving the big boot to the dollar(didn't know about that one did you?), with expensive climate change adjustments, with the Treasury bubble at full stretch and China reducing its Treasury purchase rate to pre-Bailout levels and with Bernanke pumping out greenbacks like there's no tomorrow, the inevitable coming dollar plunge - well, what do you really think folks? These are all good economic reasons for the continuation of the market dirge, not Elliot Wave reasons.

Elliot Wave theory might have application with day traders, but in the long and medium term - I would seriously suggest that watching the economic ball will pay more dividends than matching squiggle patterns on a chart.

Real economics is simple. Economic cause and market effect. That's it.

Feb 25 10:57 AM

[Jason Rines...:]

Search of my comments back from October 08 I said same thing, 5 year buy and hold in March in following sector: Energy, Health, Higher Ed and I.T. in that order. Go company specific on dilligence. Look at cash flow and management. You could take profits in 2010-2011 on the reinflation attempt bump or wait until 2013 (my forecast of next Bull market formation). Even so, don't expect the returns of the 80's and 90's as U.S. pays higher interest on debt and boomers get there final entitlement stipends on healthcare and begins dwindling down from there.


On Feb 25 09:06 AM Big-P wrote:

> I covered shorts on the 23rd and let the market bounce yesterday
> but I'm short again and will continue pounding these clowns over
> the coming hours.
>
> Here's a hint for all of you bottom-pickers out there--
>
> Watch the first week of March and prepare yourselves for the day
> Big-P "drops the clutch."
>
> -Big-P

Feb 25 01:41 PM

[Lotalolly:]

Great advise! Will keep an eye on this advice!



On Feb 25 01:41 PM Jason C. Rines wrote:

> Search of my comments back from October 08 I said same thing, 5 year
> buy and hold in March in following sector: Energy, Health, Higher
> Ed and I.T. in that order. Go company specific on dilligence. Look
> at cash flow and management. You could take profits in 2010-2011
> on the reinflation attempt bump or wait until 2013 (my forecast of
> next Bull market formation). Even so, don't expect the returns of
> the 80's and 90's as U.S. pays higher interest on debt and boomers
> get there final entitlement stipends on healthcare and begins dwindling
> down from there.

Feb 26 05:24 AM