Robert Prechter on Recession

Robert Prechter suggests that the stock market is going to enter a period of credit inflation and economic recession.  He suggests that the stock market's bull market run ended in 2000.  Even though the Dow Jones set new highs in 2007, the market is lower in terms of purchasing power.

He reviews the elliott wave pattern of the Dow Jones from the 1920's and suggests that the 5th wave top occured at the top of 2000. 

Prechter then displays a chart of the Dow Jones in terms of gold and mentions that this ratio shows how the purchasing power of the Dow has dramatically decreased against a true measure of money such as gold.  This is another precursor to a bear market.

In reviewing the financial and homebuilder indices, Prechter suggests that falling rates are not bullish for these sectors.  In reality, the Fed is following the treasury bill interest rate which is set by the marketplace when setting their discount rate.

He then covers the idea that falling interest rates are not bullish for the markets.  The last time we had falling rates was back in 2000 to 2003.  Falling rates indicate a weakening demand for borrowing while rising rates indicate a flourishing economy which has a high demand for borrowing. 

He expects for a fall in the stock market and that people should be in cash and waiting for a bottom in the stock market where all the bargains will show up. 
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...
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