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Yearend Dow Decline?

Published 10/26/2020, 02:15 AM
Updated 07/09/2023, 06:31 AM

In Elliott Wave terms, everything from the March bottom is a “B-Wave.” B-Waves may exceed the all-time high, and thereby present the nastiest fooler of all market patterns.

JP Daily Chart

B-Waves are also followed by the speediest and most violent forms of the concluding C-wave patterns (corrections are 3-legged, as opposed to the primary 5-wave patterns of which bull markets are comprised).

When considering the outrageous speed of the A-Wave in the 1st-quarter, we may imagine that this would be an absolute shocker, replete with gaps.

For the reasons immediately above, the market is telling us that the worsening COVID outbreak will be stunning. Such speed to new lows in 2020 could also involve trade war. Taken together, these may cause the market-destabilizing factoring–in of different forms of global domestic para-military action.

To understand this report fully, including the best means by which to profit from it, I advise review of the following reports.

Rest assured, the study advised immediately below will yield the greatest profit, as we prepare for YET ANOTHER lifetime wealth creation opportunity. Needless to say, the same strategy seeks to avoid its decimation.

Without divulging intellectual property, the March 11, 2020 article included a special section on the composition of the rules-based strategy. This strategy has represented the SOLE long term recommendation since the August 2019 report.

While each reference to the strategy since 2019 did describe what it aims to achieve, the March 11, 2020 SPECIAL SECTION dove into how to concoct such a formula. This special section is the most important review of the past reports.

The strategy’s engineering aims to provide excellent returns during periods of sustained rally (i.e. – post March low), along with downside leverage that benefits mightily from sharp quarterly declines of even 8-10% (due to the VIX’s historic moves, the 1st-quarter’s reports indicated that multiple gains of greater proportion would have resulted for a so-engineered strategy).

Meaningful risk-adjusted gains during periods of rally are integral to the engineering, though the strategy exists principally to protect against dependence on bearish phases for returns. The principal purpose is to enjoy significant profits during sharp market declines.

The December 2, 2019–February 6, 2020 reports forecasted a Dow decline of 10,000 points, as well as a $10 rally in silver (both have occurred). Review of the strategies employed is also worthwhile.

SLV Daily Chart

The March 19, 2020 report discussed the Dow’s and SLV’s price and volatility levels’ extremes and described how investors may calmly manage their portfolios during such a period of mayhem.

By using March’s extremes as an example, the report aimed to illustrate how any such situation could be used to be best positioned for whatever may follow such historic volatility levels. There was no need to panic. One could profit and also be positioned for whatever may lie ahead.

The July 13, 2020 report discussed another 10,000-point decline in the Dow, adding that the silver lows were achieved, regardless. As with the August 2019 report, I advised sticking with the rules-based strategy to benefit from any sustained market rally.

While the present is no different, I am adding that I believe that the Dow may suffer a yearend collapse of 10,000 points, with potential to 16,500.

I believe that we are now beyond needing to be positioned to protect against and profit from the Crash, by using a logical rules-based strategy such as one discussed in these reports.

As with the beginning of this year, I am again forecasting a 10,000-point Dow debacle, but this time to end the year. Of course, for ALL intents and purposes, the upshot is the same in terms of the strategy to employ.


The “really, really big” stimulus package is likely only being used as a pre-election “hook,” and will logically appear after the greatest financial disaster since 1987.

Be warned: A “crash” is not just a “big move.” Billionaire managers thought that 2008 was a crash.

A “Crash” involves dislocations, potentially involving bids being higher than offers; the latter indicates a loss of control by the authorities, and is what separates 1929 and 1987 from the other 50% market declines.

It is the aspect of the perceived loss of order that properly defines a Crash; to underscore the point, by comparison, the loss of legal rights is a minor concern for the public.

After 31 years, I have observed that the best investment results during a period of doubt and uncertainty stem from following a discipline that keeps one positioned for downside leverage, while controlling exposure to the loss of profits.

Simply, kept onside by one’s strategy’s rules, one must be positioned to continue to gain from ongoing decline, benefiting as well from the associated extreme volatility levels.

Such a strategy also positions the investor to also benefit from an otherwise unforeseeable rally arising out of the market’s darkest hour. This is achieved by the formula’s rules that control the loss of profits.

Ordinarily, investors take fear-based decisions during the market’s darkest hours. Make yours based on discipline.

October 25, 2020 11:20 PM EDT

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