Since the totally unexpected [by the vast majority] is what the future often holds, at least as it pertains to markets...how about this one?
We're no EWave expert, but here goes:
We're in a huge 5 wave sequence up.
Wave 1 was 1982 to 2000 [800 Dow to 14,000]
Wave 2 pullback-correction...2000 to the March 2009 low.
Wave 3 [the biggest and most powerful] started March 10th 2009 at about Down 6,800.
Psychologically is this supportable?
What we mean is that if "everyone was in" and bullish, no way is it possible.
but that is not the case.
Investors are afraid of stocks, believe long term buy and hold is dead [the "experts said so, right?], have lowered allocation to stocks in 401Ks and IRAs. They do not trust the market and think it is rigged against them by the big guys so they can't win.
That situation allows for huge upside as it would take a long time [years] and lot of points gained for them to fully embrace.
[It took about 15 years after the start of the bull market in 1982 for the public to believe and go "all in" loaded up for the yr 2000 top and subsequent evisceration.]
So, wave 2 consolidation of the move from 800 to 14,000
Ten years of zero return: SnP [negative if adjusted for inflation and adjusted for real money...gold
[or if you prefer...Nasdaq went from 5,000 corrected all the way back to 1200 or whatever it was]
Wave 3 up now in progress from March 10th, 2009 with end point undetermined but higher than the majority can even imagine.
We do not know if this will happen, but it does have one thing going for it.
Current market psychology supports it
Hardly anyone [except Don Wolanchuk who believes that is what is in store] is even entertaining the idea, let alone believes it will be the case... and remember what we started with...
Markets have shown with shocking regularity how, what was not thought possible, happened time after time the last 5 years.
OIL $140 to
OIL $35. [less than 9 mo]
Gold $250
Gold $1350 and rising
Silver $4.50 silver $23.50 and rising
Market, 14,100 to 6,800
Nasdaq...Ever getting to 5,000...who would have believed that in 1995?.
Nasdaq 1200
Gulf Resources, Growing fast superior companies like it could be had day after day for 1 Times, 2 Times their annual profits in late 2008. has to be impossible but it happened.
Internet capital Group...$6 to $212...Aug 1999 to Dec 1999 with a market cap of $50 billion and hardly any sales and no profit
Real estate....Yea, a lot of us thought it would drop nationwide but the majority, vast majority including top guys at Citi, Leh, GS, MS, ETC etc...most assuredly did not and had massively leveraged bets against that outcome.
Always brainstorm outside the box...what is possible...
So how about the other side of the coin...
A market drop to Dow 5,000,
Maybe the majority do not think so, but a heck of a lot of investors are worried that it can and maybe will happen.
10 to 1 over those who think huge upside is possible.
Maybe even 20 or 30 to 1.
Always be open to signs the highly unexpected is emerging or well underway, but most just can't see it yet.
Fabian
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