Robert Prechter at Elliott Wave International thinks we’re on the verge of the “biggest bear market in nearly 300 years”. Prechter, who believes the market moves in predictable waves, says the long-term pattern is one of dramatic upward trends with severe corrections inbetween.
He provides the following chart to show the very long-term trend in stock prices. Prechter believes the current downtrend is simply the beginning of a much more dramatic move that mirrors past market declines. Based on this data the market is well overdue for a sizable correction:
“Not even Major League Baseball can rival the stock market’s wealth of statistical data. And after studying the relevant data and analysing the long-term pattern, Prechter offered this conclusion in the May issue of The Elliott Wave Theorist: “The current bear market will be the biggest in nearly 300 years.“
Yes, Britain’s “South Sea Bubble” in the early 1720s was the last time a bear market was comparable to what we may see unfolding now — it’s represented by that vertical drop which you see on the chart.”
This post appeared previously at Pragmatic Capitalism.