This Will Signal the Bear Market’s Halfway Point
Here’s what investors will be doing when the “real low” arrives
by Bob Stokes
Updated: March 16, 2020
On March 12, the date the DJIA closed lower more than 2350 points, the U.S. chief equity strategist for a major financial firm appeared on Bloomberg after the market close and opined that "90% of the damage has been done."
He went on to affirm that if an investor's time horizon is longer than two weeks, then yes, the stock market plunge represents a good buying opportunity.
Well, if that's the sentiment after the DJIA had shed more than 28% (through March 12), then the downturn may have ways more to go than just another 10%. In other words, such financial confidence is usually not the prevailing sentiment near the end of a bear market.
Now, granted, this was just one opinio... except, it isn't. The chief equity strategist's sentiment is just one example of an entrenched financial optimism.
As our March 11 Elliott Wave Theorist says:
As yet, fear is nowhere near epic.... Relative to the size and breadth of the down days, TRINs have been remarkably low. All moving averages from 3 to 55 days are between 1.00 and 1.30, indicating nearly equal volume distribution in down stocks vs. up stocks. In other words, there has been no panic....
How do you know when a bear market is past its midpoint? Answer: when people stop cheering for lower prices.
A Bloomberg article reported, "Vanguard's VOO attracted nearly $4.2 billion so far in March." What is the VOO, you ask? It is an exchange-traded fund representing the S&P 500 that is "commonly used by retail investors." The phrase, "so far in March," means just over the past 7 trading days. Inflows in the down month of February were $8.3 billion. [The graph] tells you all you need to know: Each day, people think they are buying a low. When the real low arrives, they will be selling.
The scores of technical indicators that our analysts study are revealing a lot about the potential depth of the unfolding bear market.
Of course, our primary analytical tool is the Elliott wave model.
It tells us that, even though the market's recent dramatic behavior is rare, it is not unprecedented. Meaning, we can see one or more scenarios of how things will progress from here. And as always, we are sharing our findings with subscribers.
You too can learn how similar price patterns have unfolded in the past -- so you can prepare for what's likely next.
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Financial History Provides 2020 Stock Market Clues
The sudden and striking stock market moves here in early 2020 are rare – but not unprecedented.
The just-published March Elliott Wave Theorist shows you similar stock market chart patterns from the past – so you can apply that knowledge now.
Reviewing these historic chart patterns will reveal a lot about what to expect next.
Prepare your portfolio by taking advantage of EWI’s 30-day, risk-free trial.
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- 1. Robert Prechter, Author of 16 market-related books, New York Times Best-Selling Author and Editor of Elliott Wave Theorist
- 2. Steven Hochberg, Editor of the Short Term Update and Co-editor of The Elliott Wave Financial Forecast
- 3. Peter Kendall, Author of The Mania Chronicles and Co-editor of The Elliott Wave Financial Forecast
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