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Bob Prechter tells clients to go 200% short as markets crash

with 4 comments

Market timer and Elliott Wave guru Robert Prechter told his clients to go 200 per cent short on financial markets two weeks ago, and this revelation on CNBC TV yesterday added to the down pressure on stock markets.

Prechter has made some excellent calls in recent years, including the bottom of last year’s sell-off in March and the subsequent rally.

His eccentric theory that a major deflation, US dollar rally and market crash are in prospect has been popular viewing on ArabianMoney (see this video section).

This is far from mainstream thinking on Wall Street where a modest correction is the most expected in an otherwise steady upturn in financial markets in 2010. But ArabianMoney has pointed out on many occasions the parallels between the debt-fueled market boom of the 2000s and the 1920s or Japan in the 80s (see this article on Japan).

To expect a period more like the 1930s in the US or 1990s in Japan for the economy and financial markets is therefore logical to us.

If Prechter has got his timing right then a stock market collapse will now follow the incredible rally from last March. This should take stocks down for a long period and push the US dollar back up. We will see if he is right again. If so aggressive short positions are the only way to go.

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Written by Peter Cooper

January 27, 2010 at 3:11 pm

4 Responses

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  1. WHAT IF B. PRECHTER WERE GETTING BLIND ABOUT A REMAKE OF SEPT 1982?

    Please see
    US STOCKS_WHAT ABOUT A REPLAY OF SEPT 1982?
    http://www.market-oracle.co.uk/article16918.html
    THE 2009 2042 BULL MARKET IN US STOCKS: THE EASIEST MARKET CALL EVER
    http://www.market-oracle.co.uk/article16500.html

    Are you sure you expose the right “wave expert” with Bob Prechter?

    After translating long ago into French “Elliott Wave Principle-Key to market behaviour” the book he CO-authored with A.J Frost, I have devised at last the Principles of Elliott Wave Synchronicity (EWS) after 7 years of work (see http://www.elliott-wave-synchronicity.com) which build the MOST EFFICIENT UPGRADE of the basic and aging Elliott Wave Principle. They lift the Wave Principle from art towards science.

    A very short term test is easy for you: as I have told subscribers, Jan 29 and Feb 1st ARE the most exhilarating days ending a 5 month consolidation for international stock indexes within a large bull market due to extend over 2 more years. As a matter of fact, Feb 1st IS just day #1 of a fast rise that will carry US stock indexes to new highs at a much faster pace than Bob Prechter would ever wish after his WRONG market call made on CNBC on Jan 26 2010. Moreover, the deepest irony is that the situation in South Africa should have rung a bell for Bob Prechter as it is a reminder of his 1982 call. In other words, Bob Prechter is calling to go short at the low of a “wave 2”……….

    Regards.

    Eric F.M. Chevrette
    Original deviser of the Principles of Elliott Wave Synchronicity and
    Publisher of The Synchronicity Letter PLUS

    Ed Note: So the stock market will rally as the world economy stays in deep freeze and unemployment rises? Have we not just seen the rally from the bottom last March? Where is the consumer spending and credit to make this happen?

    eric chevrette

    February 3, 2010 at 12:55 pm

  2. SPXU short position paid off well yesterday. Was under 37 in pre-market and went to over 39 during trading hours only to close just under 39 at 38.88

    VIX also spiked over 8% during trading hours yesterday. High volume and volatility equals panic which lead to sell-offs. Taiwan Index is a good Index to keep an eye on. You can tell from there which way markets will move (Not always true but most of the time they are accurate).

    Oil is back at a critical level again so if it tanks from here Gulf Stocks will see a pretty big correction.

    Andy

    January 29, 2010 at 4:05 pm

  3. What makes me smirk is that it appears that he markets have listened to him. Keep on talking Bob and bring the gold price down.

    Joseph

    January 28, 2010 at 4:12 am

  4. With all due respect to Prechter his timing is wrong. The “Hope” rally will continue until there’s a policy change. At this point in the US it is very unlikely that Helicopter Ben will decrease his purchases of worthless fannie/freddie/ginnie paper and almost no change interest rates will rise above 0. As long as that is in place you will see stocks “leak” up. I would guess it will be sometime late summer when a 2x short approach might be rewarding.

    Edna R. Rider

    January 27, 2010 at 5:04 pm


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