Posted on 28 June by Henry Blodget
Published on 2 July by Jeff Sommer
My wave count for Dow is as shown below. It may or may be the same as the interpretation of that of the Guru, which I don't have a copy, but my count of a mega wave (IV) is going to be a major correction. Since mega wave (II) is a simple corrective wave that is deep and sharp, mega wave (IV) can be a complex wave that will be shallow but over a longer duration. It may take the form of a complex A-B-C-D-E that can take 10 to 15 years to complete with upper resistance at 11,000 and lower support at 5,000 to 6,000.
But James Paulsen, an investment strategist with Wells Capital Management, has a different view. As usual, there are buyers and there are sellers everyday.
The different views expressed could be due to the different timeframe that they were having in mind. Robert Prechter is definitely referring to a very longterm scenario, "the end of a Grand Market Cycle", "The biggest decline of the last 300 years". The 89% drop in the 1929 'Great Depression' was only 80 years ago. Paul Krugman, I think, was talking about the possibility that the market would turned downward, more of a medium term scenario. Whereas James Paulsen appeared to me that he was talking about shorter-term uptrend.
It is possible that the current trading activities and transections are the matching of deals between the long-term bears that are cashing out and the short-term bears or bulls or traders that are trying to profit at each rebounce.
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