tuesday slide, page-12

It looks to me like the VIX is going to break up in a big way. Could mean we are back to catching falling knives.

According to Steven J. Williams the bear market will not end until 2017. Here is a snippet of his analysis...

Taking a very long term look at things I pull out my updated 200 year chart and some zoomed-in charts of the current situation. The top is CyclePro's most noted chart. This is a 200 year history of US stocks with yearly Hi-Lo-Close bars all adjusted for BLS inflation rates. As is easily visible on a log scale chart, stocks stay within a consistent channel through its entire history. Each time it touches or pierces the upper channel, eventually it moves to the lower channel, and vice versa. There is even a higher channel line (orange) that has only been touched in 1929, 2000, and 2007. The lowest channel line (orange) has only been touched in 1813 and 1982. The 1900-1906 double touch was followed by a bear market through 1920. The current 2000-2007 double touch may follow a similar pattern. My target is actually 2016-2018. Even the 1906 bear market initially came down to the centerline, bounced up, and then fell through several years later. I expect the same to happen this time around with my target no later than 2012 -- but maybe we are already there...



Zooming in on the later part of the chart, the following shows 1962 forward. This chart is a linear scale (so the channel lines appear curved). The top chart is also adjusted for inflation using 2000 as the base, but it is using the data from the BLS (Bureau of Labor Statistics). From the vantage point of inflation-adjustment we can see how the 1987 crash compares with this weeks sell-off. My former target was 5600, but I'd be satisfied to see anything around the 6000 area depending upon whether it hits earlier or later.



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