The Slope of Hope

"Even though the market is about to begin its greatest decline ever, the era of hope is not quite finished.  For as long as another year and a half, there will be rallies, fixes, hopes and reasons to believe in recovery.  Our name for this phase of the bear market is the 'Slope of Hope'."
Robert Prechter, June 2010

Prechter's Perspective

"The greatest extreme in positive social mood in centuries has led to the greatest expansion of credit in history. The level of outstanding debt is unsustainable and will be unserviceable and unpayable in the deepest depression in 300 years. The trend toward negative social mood that has been in progress since 2000 and which is about to accelerate will continue to curtail lending and lead to a tidal wave of defaults and a terrific deflation. The amount of outstanding credit today is so large that systemwide defaults could lead to as much as an 80-90% decline in the volume of dollar-denominated credits worldwide. Prices of everything, including corporate shares, would fall to reflect this change in the total supply of credit. In such an environment, surviving dollars and dollar credits, representing the denominator of the DJIA, will rise in value, and the Dow-along with everything else not used as money - will fall in dollar price."
Robert Prechter, Elliott Wave Theorist - May 2010

The Mood of The Herd

"The crowd is the perceived leader, but it comprises nothing but followers. When there is no leader to set the course, the herd cues only off itself, making the mood of the herd the only factor directing its actions."
Elliott Wave International, Elliott Wave Theorist - 2/11/10

Fear, Distrust, and Anger

"As social mood becomes more positive people become more confident trusting and content. They feel little need to prepare a defensive or offensive force. As social mood becomes more negative, people become more fearful, distrusting, and angry. They are impelled to prepare to defend themselves or attack an enemy."
Elliott Wave Theorist, 1999

Zombie Financials

"Then there's the dominant source of trading volume, financial stocks. And not just any financial stocks, but five former giants that paved the way into last fall's bearish tsunami, Citigroup, AIG, CIT, Fannie Mae and Freddie Mac. These five stocks accounted for 30% of NYSE volume on August 21. The stocks are sometimes referred to as the zombie financials because they are bankrupt or nearly bankrupt enterprises that have, to varying degrees, become wards of the U.S. government."
Elliott Wave Theorist - August 27, 2009

Wave 2

"Wave 2 should regenerate substantial feelings of optimism. At its peak, the Fed will appear to have saved the banking system, and investors will be convinced that the bear market is behind us."
The Elliott Wave Theorist - April 18, 2009

For a technical perspective, review The Point of Recognition.

For a psychological perspective, review The Return To Normal.

"The door to the last great selling opportunity is wide open at the moment." Elliott Wave Theorist 8-27-09