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Stocks Have Started The Next Great Bear Market

August 9, 2015

We believe stocks have started the next Great Bear Market and are headed substantially lower. The decline will be stair-step, but inside this Bear Market, which could last 7 years, there will be several stock market crashes. We believe there is a high probability that the first of many stock market crashes could occur in the next one to three months. When it is all said and done, seven years from now, we could see the DOW Industrials below 1,000 (that is not a misprint).

The Industrials have completed a Rising Bearish Wedge from October 2014, with a truncated top, meaning its final wave {e} up of e-up failed to exceed its May 19th, 2015 wave {c} high. May 18th was a Phi mate turn date. Friday, August 7th, 2015’s decline to 17,279 is decisively below the wave {d} bottom, below 17,465, and further confirms that the top is in and the next great Bear market has started. We can also label “the top”, the wave e-up finish, as having completed on May 19th, 2015. In both cases a new Bear Market has started. There could be a bounce in the short run, but the trend remains down. The Industrials have declined 1,000 points since our May 2015 Phi mate turn date and its all-time top.

We are now on HIGH ALERT!!!!! Grand Supercycle degree wave {IV}’s decline has likely started. We need to pay close attention and be prepared for a September 2015 event that triggers a stock market crash and economic depression. We have a Phi Mate Turn Date Scheduled for September 15th, 2015.   

An Ascending Broadening Wedge top pattern has completed in the Industrials, a pattern that started at the end of October 2011. It is an a-b-c-d-e pattern.

The Industrials have essentially reached the upper boundary of the Jaws of Death pattern, the top for Grand Supercycle degree wave {III} up. This pattern is complete, as the Industrials are falling hard from this pattern’s top.

Above we see that the S&P 500 topped 1 point below its all-time high on Monday, July 20th, and fell impulsively since then. That high on July 20th is a truncated top for wave {e} and concludes the Rising Bearish Wedge from October 2014. The top is likely in for the S&P 500. This will be confirmed with a decline below point {d} above, below 2,044.

The NDX reached the upper Blue boundary line and topped precisely there, and has since fallen hard. This qualifies as a completed rally. The NDX has declined 200 points since we wrote in our newsletter to subscribers three weeks ago, “The nature of the rally from early July is parabolic, which means the reversal could be swift, powerful and surprising to many.”

We now have two official H.O.’s on the clock at the same time! Both will be in place during the high probability crash period from early September into mid October. Over the past 30 years, all but one crash (a decline over 15 percent) have had an official H.O. on the clock. While an official H.O. is not a guarantee a crash is coming, it is essentially a necessary precondition for a crash to occur. It tells us this stock market is in a very fragile and dangerous condition and will remain so for months. About one out of every four times this signal appears, a crash follows.

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Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania, and can be reached at www.technicalindicatorindex.com.  The statements, opinions, buy and sell signals, and analyses presented in this newsletter are provided as a general information and education service only.  Opinions, estimates, buy and sell signals, and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice.  Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision.  Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment.  Neither Main Line Investors, Inc. nor Robert D. McHugh, Jr., Ph.D. Editor shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. Copyright 2015, Main Line Investors, Inc. All Rights Reserved. 


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