What is the Weimar Republic?

Lemmings all in the pool Dow Jones index

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Doc, I read your articles few years back and everything folded according to your theory. It was hard for me to believe at that time but almost everything was true the way you had explained. Hats off to you !

• My question, where we go from here?
• How many years the downturn will last?

Regards,

Jeet.

Hi Jeet,
My Harmonic Cyclical Theory states that secular markets run for 18 years. We started the secular bear market cycle in 2000 to 2003 with a cyclical bear market, last 18-36 months. Then we started a cyclical bull market from the lows in March 2003 to 2007. The Feds interest rate cuts and the vast amounts of money created by the "carry trade," caused the bull market to make all time new highs. Just since Oct. 07, the market has given up 40% of those gains, mostly in the last 4 weeks. IN 1930-1948, a secular bear market caused by deflation, declined by 80%. In 1948-1966 we had a normal economic expansion secular market after world war II. In 1966-1984, we had a secular bear market caused by inflation. Then in 1984-2002 we had the largest secular bull market, caused by the baby boom generation from war world II.
The secular markets overlap each other by 18 months when alternating from bull market to bear market. Hence, the uncertainty during the last bear market in 2000-2003. The last cyclical bull market reaching all time highs was caused by the Fed creating the housing bubble. This current bear market cycle should last only 18-36 months or not depending upon two factors.

• Will the baby boomers begin liquidating their pension plans
• Can the Fed re-inflate the economy without causing hyper-inflation? (Weimar Republic) ( See this link for more info. )

The typical bear decline during an inflationary bear market is -45% and during deflationary bear markets could be as high as 80% I know, stop laughing, remember the NASDAQ index at 5000 points! How low did it go in 2003? The NASDAQ declined 80%!!

Now in 15 days we will see if the market stabilizes, given the "Obama" factor. If the market stabilizes, we will see higher taxes for everyone or the Fed will continue to print money like the Weimar Republic. If the Dow Jones Index falls below 7200 points, we will be heading lower into a depression.

I will be answering more questions concerning 401(k) plans, insurance policies, and financial survivor plans in later posts.

Thanks Jeet for your question.

God Bless


Doc

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What Is the Weimar Republic?

Market Forecast to March 25th

The Market Forecast to March 25

The Dow, NASDAQ, S&P 500 and Russell 2k are in red signal line testing mode. These indexes should bounce off the red signal line within the next two weeks. Should these indexes drop below the red signal line on the Harmonic Stock Clock, a Bear Market Correction (BMC) could cumulative into an 18-20% sell off on stocks that comprise the indexes. The key signals to watch over the next few weeks are the treasury inverted bond yield and the 10 year bond reaching a high over 5% before the Fed raises rates once again at the end of the month.

Image by doctrader via Flickr

New Dow Jones Index Forecast: high 11208, low range 10786, total points 422.
New NASDAQ Forecast: High range 2333, low range 2241 total points 92
New CRB Index Forecast: High range 339 low range 315 total points 24
New S&P 500 Forecast: High range 1303, low range 1259 total points 44 points
New U. S. Dollar Forecast: High range 91 low range 89.3 total points 1.7
New Russell 2000 Index Forecast: High range 749, low range713, total points 33.
New Gold Index Forecast: High range 574, low range 538 total points 36.
New Oil Service Index Forecast: High range 212 low range 182 total point range 30


This week is the anniversary of the NASDAQ reaching an all time high of 5000 points. After 6 years, the market is barely up 50% off the lows in 2002. This should inspire profit taking, especially during option expiration week. I am expecting an 18 to 20% market wide correction within the next 2 weeks.

The other possibility is a market short squeeze, pushing the Dow Jones Index to new highs around 12,400 points. The market internal have been weak all week compounded with geo political concerns, mad cow, bird flu, and the uncertain future direction of the Fed with it's continual rate increases.

God Bless

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