Stock Index Timing, The Big Picture

George Slezak's Stock Index Timing Commentary

The Big Picture.
C 2009, George Slezak, Bonita Springs, FL 34134 1-888-311-3400

This page is a broad view of the Big Picture.

Big Picture update 8/22/09

From time to time I write my weekly commentary updating my "big picture" view of the market. I am posting those special commentaries as my "big picture" achieve file.

The following PDF file is my weekly commentary from 5/16/09.

http://www.futuresemail.com/ffax/bigpic/bigpic20090522.pdf

The following PDF file is my commentary from 10/28/08.

http://www.futuresemail.com/ffax/bigpic/bigpic20081025.pdf

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My November 2008 interview with Marketviews.tv is a good beginning point in understanding my Big Picture view of the markets. See http://www.stockindextiming.com/marketviews/nov08/index.htm

Here is a portion of my August 15, 2009, commentary that helps update from November 2008 to August 2009 on where I believe we are in the big picture.

Saturday 8/15/09, 9:30 am

FOUR TO SIX WEEKS LEFT TO THE UPSIDE

I FORECAST AND I FOLLOW.

Since February and the March low, I have been making the market comparison to the 1974 market bottom and the 1938 and 1978 market bottom. Both of those market bottoms suggest this current market move will peak at around .618 the bear decline, just over 11,000, by the end of September.

Then, I believe we need to turn the other way.

The 1974 market would suggest a .382 pull back between October and March (6,700 to 11,000 is 4,300 X .382 is 1,600 points or 11,000 back to 9400 - WHERE WE ARE NOW.)

The 1938 and 1978 market would suggest a .618 pull back between October and January (6,700 to 11,000 is 4,300 x .618 is 3,200 points or from 11,000 to 7800.)

So after a .618 retracement of the bear market to above 11,000, I expect a pull back for 3 to 5 months of 1,600 Dow points back to 9,400 OR a 3,200 point pull back to 7,800.

WHY IS EVERYONE ARGUING WITH ME THAT THE BEAR MARKET ISN'T OVER YET? All the bears are calling this a 382 back (9400) or half back (10400) or 618 back (11,300) and then they say the bear will continue and do a new leg down to new lows.

SO WHAT! Are they looking for new lows by the end of the year? I'm saying we could fall back under Dow 8,000 by the end of the year in the 1938 1978 pattern comparisons! The bears want under 6,700 sometime next year, but are they looking for the possibility of 7,800 before the end of 2009!

Comeon! Last week I said I was more bullish than Abbey Joseph Cohen when she said the market could make it to 10,500 (I look for just over 11,000) and NOW I'M SAYING I'M MORE BEARISH then Dr Doom because I think we could have a 3,000 point Dow drop before the end of the year (in October.)

But, as REAL BEARS go, I really have no honor making money on the upside. Bears believe it is their birth right to lose money ANY TIME the market goes up. Bulls feel the same way about the market going down! I could ask a dozen bulls what they plan to do during the time I expect the market to go down between October and the end of the year and they would say they are long term holders and they will ride it out!

In the 1974 comparison above I think the Dow could go up 2,000 points in the next six weeks, and then fall 2,000 points on the following six weeks. The bears I talk to say they want me to call them when I'm ready to go to the sell. (Some actually say they will wait to open their new managed account until I turn to a sell on the market!)

So we see all these bull and bear discussions on TV and it is like the networks think they are providing a balanced view of the market, when in fact all they are saying is here is someone that will lose money when the market goes up or someone that will lose money when the market goes down. How can you say your a bear just because you think some day the market will go lower than 6,700? How can you say your a bull when all you say is the market will be higher than where we are next year?

Here are longer term pictures of 1974, 1978 and 1938. These show us in bull markets, but NOT LONG TERM bull markets. I don't believe we are in long term bull markets. I think we will find a top in 2010 that the 1974 comparison suggests would be near 14,000 and the 1978 and 1938 comparison suggests may NOT be higher than the 11,300 projection for 2009. All three suggests we then go down in 2011.

THESE ARE NOT MARKET COMPARISONS TO LONG TERM BULL MARKETS! I believe we need to be prepared to FOLLOW the market over the next few years if we want to be successful in the market.

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Making your money grow in the Grand Bull Market was often best describe as a "Buy and Hold" market strategy. Pick good stocks and hang on. In Grand Bear markets you need to consider "Market Timing" to make your money grow. You need to be in the market during times of market strength, and out, or short, during times of market declines.

See additional concluding comments each week in the weekly commentary.

Good luck and good trading!

George Slezak

Research Notes: SEE REGULATORY DISCLOSURES REGARDING HYPOTHETICAL RESULTS AT BOTTOM OF PAGE

Hypothetical review		Most Aggressive, long and short			Aggressive, long or out
Stock Index Timing .com "In the"	S&P	points	percent gain	Compounding		points	percent gain	Compounding
Stock Index Timing .com "In the"	S&P	points	percent gain	gains in S&P totals		points	percent gain	gains in S&P totals

"red" 12-Nov-1999	1396			1396	1396
"green" 28-Sep-2001	1041	355	0.254298	1751	1041
"red" 28-Mar-2002	1147	106	0.101825	1929.296	1147	106	0.101825	1538.148
"green" 2-Aug-2002	864	283	0.246731	2405.312	864
"red" 25-Jun-2004	1134	270	0.3125	3156.972	1134	270	0.3125	2018.819
1134 is 81% of 1396 since 11/99 to 6/04			3156 is 226% of 1396 since 11/99 to 6/04				2018 is 144% of 1396 since 11/99 to 6/04

	Other market information
Note: All time S&P high		24-Mar-00	1552
Note: recent S&P low		10-Oct-02	768	49.5% drop	50.5% of 1552 high
Note: 2004 S&P high		5-Mar-04	1163	51.4% gain	75% of 1552 high

Big Picture Research Notes: The NEXT Grand Bear Market

After reviewing the above "Big Picture" of the market compared to past Grand Bear Markets we need to have a plan for trading for the next TEN YEARS or more. The Next Grand Bear market will likely be made up of Bull market phases and Bear market phases.

Into the year 2000, we had a twenty year grand bull market, much like 1942 to 1966, or 1896 to 1929. Those periods were followed by grand bear markets that lasted (1929 to 1942 or 1966 to 1978(or 82)) for 10 or more years. Grand BEAR MARKETS are made up of intermediate Bull markets and intermediate Bear markets.

The first intermediate BEAR MARKET, or the first bear phase in the new secular bear market, went from January 2000 to October of 2002, a total of 34 months, and a price decline from Dow 11908 to 7177, or a 40% decline.

The first BULL PHASE in the secular bear market has run from October, 2002 to possibly February 2004. A time period of 17 months to the February 2004 top, and a 50% gain from the October 2002 low of 7177 to the February 2004 Dow high of 10794.

Let's look ONLY at the intermediate bear markets and bull markets in the past two GRAND BEAR MARKETS.

The big picture charts above should be used for reference.

In the 29 to 42 grand bear market there were 4 intermediate bear markets and 3 intermediate bull markets.

Bull			Bear
			9/29 to 7/32	34 months	386 - 40 90%
7/32 to 7/33	12 months	40.56 to 110.53 +127%
			7/33 to 7/34	12 months	109 - 90 (82) 17%
7/34 to 3/37	33 months	84.58 to 195.59 +131%
			3/37 to 4/38	13 months	195 - 89 54%
3/38 to 9/39	18 months	97.46 to 157.30 +61%
			9/39 to 4/42	37 months	157- 92 41%

In the 66 to 82 grand bear market there were 5 intermediate bear markets and 4 intermediate bull markets.

Bull			Bear
			2/66 to 10/66	8 months	1001 - 744 27%
10/66 to 12/68	26 months	735.70 to 1001.10 +36%
			12/68 to 5/70	18 months	994 - 627 37%
5/70 to 1/73	32 months	627.5 to 1067.20 +70%
			1/73 to 12/74	24 months	1067 - 570 47%
12/74 to 9/76	22 months	570.01 to 1026.26 +80%
			9/76 to 4/78	22 months	1002 - 742 26%
3/80 to 4/81	13 months	729.95 to 1030.98 +41%
			4/81 to 8/82	16 months	1030 - 770 25%

At each market top optimism was high (PE ratios) and at each market bottom, pessimism was rampant (PE ratios meaningless because of losses).

The 9 bear markets in the "Grand Bears" had a time distribution and price decline as follows:

Months

Losses %

The 9 bear markets in length sequence had the following related losses. We can conclude that generally the longer the time of the Bear Market, the larger the market loss.

Months	8	12	13	16	18	22	24	34	37
Related % loss	27	17	54	25	37	26	47	90	41

The 9 bear markets in degree of loss had the following length in time. We can conclude that generally the larger the loss the longer the time of the Bear Market.

Losses %	17	25	26	27	37	41	47	54	90
Related months	12	16	22	8	18	37	24	13	34

First Bear market and First Bull Market in the Current Grand Bear Cycle

Bear			Bull
1/2000 to 10/2002	34 months	11,908 to 7,177 40%	10/2002 to ???		7,177 to ??
			? 2/2004 ?	17 months?	? 10794 ? 50% ?

The 7 bull markets in the "Grand Bears" had a time distribution and price gain as follows:

Months

Gain %

127

131

The 7 bull markets in length sequence had the following related gains. We can conclude that generally the longer the time of the Bull Market, the larger the market gain.

Months	12	13	18	22	26	32	33
Related % gain	127	41	61	80	36	70	131

The 7 bull markets in degree of gain had the following length in time. We can conclude that generally the larger the gain the longer the time of the Bull Market.

Gain %	36	41	61	70	80	127	131
Related months	26	13	18	32	22	12	33

Does that 12 month bull phase screw things up? No, it was the recovery from the bottom in 1932.

In September 2002, I used the above information to conclude that we needed to be on "BOTTOM WATCH." I said then: "You know, the current Bear is near the extreme of the time distribution and the Dow was about in the middle of the % decline distribution."

Let's look again at these 9 Bear market bottoms:

1932		Lower low retest
1934		equal low retest
1938		half + back retest
1942		No retest

1966		half back retest
1970		half + back retest
1974		lower low retest
1978		75 % back retest
1980		65% back retest

The March 2003 87% retest of the low was an extreme retest relative to the above table and suggests a "heavy" bull phase.

Now we are in July, 2004, 5 months since the actual market top back in February 2004 that may stand as the Bull phase top, and we need to get a view of where we may be in the new bear phase.

Following are the seven bull market tops in the past two secular bears.

12/68	78% retest 6 months after the high	followed by a 17% drop in 3 months
1/73	68% retest 9 months after the high	followed by a 15% drop in 1 month
9/76	83% retest 3 months after the high	followed by a 10% drop in 3 months
4/81	88% retest 2 months after the high	followed by a 20% drop in 3 months
7/33
3/37	82% retest 5 months after the high	followed by a 40% drop in 3 months
9/39	58% retest 7 months after the high	followed by a 28% drop in 2 months

The above table suggests we could see a 15% to 25% drop in the market in the next few months.

Good luck and good Trading!

George

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