Here’s Why This Bear Market is a “Global Story”

“The decline started in emerging market stocks way back in February 2021”

by Bob Stokes
Updated: October 18, 2022

A widely accepted measure of a bear market is a drop of 20% or more in a major index from an all-time high.

By that measure, both the S&P 500 index and the Dow Industrials have entered bear market territory since their January peaks.

Yet, Robert Prechter's Conquer the Crash offers a message for those entirely focused on U.S. stocks:

The emerging bear market is a "global story."

That assessment is certainly validated by this chart and commentary from our October Elliott Wave Financial Forecast:


The decline started in emerging market stocks way back in February 2021. It spread to major world stock markets, excluding the U.S., in June 2021. Both these indexes fell below their early 2020 peaks earlier this year. The top graph shows the Dow Jones Industrial Average, which peaked on January 5 of this year and [in the week of Sept. 19-23] declined below its early 2020 high.

Another message which Conquer the Crash emphasized is the "all the same market hypotheses." As the book notes:

When stocks turn down, it will signal a major liquidity contraction, and all major asset classes should decline together.

This message is also being currently confirmed. Let's return to the October Elliott Wave Financial Forecast:

Clearly, liquidity is waning as normally disparate assets are starting to trend together. [In the last half of September], for instance, the decline in stocks was joined by a decline in bond prices, precious metals, FOREX, commodity indexes and oil.

There's even been a correlation between stocks and Bitcoin.

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Liquidity is Waning. That Means …

...Most financial markets will likely go down together.

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