Prechter Reiterrates Call For Dow 1,000, Even As Surging Gold And Plunging Dollar Leave Much Credibility To Be Desired

Tyler Durden's picture

One has to wonder by now just what is so magical about the Dow 1,000 that Prechter has been so infatuated with since time immemorial. Why not 999? Or 1,001. Oh well, as the rest of the world continues to expect the Dow's drop to precisely 1,000, Prechter's call for a surging dollar (ahem), for a plunge in gold (ahem, ahem), and for a rout in stocks, has left quite a few investors with some unpleasant margin calls. What is odd, is that Prechter seems to completely miss the natural hedge offsets of his bearish trade, and he confuses both inflationary and deflationary outcomes that reinforce each other's loss, in his blind pursuit of a market crash. Perhaps Mr. Prechter would be wise to heed the statement from Brazilian finance minister, who earlier acknowledged there is now a full-blown war of central bank attrition. And, no this is not a zero sum war, as all currencies are devalued equally against each other, but absolutely lose value against other fixed assets like gold.


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plocequ1's picture

He made the machine angry. Beware the Machine lads. Stay off the Moors.

Missing_Link's picture

Mr. Prechter: congratulations on your one lucky call way back when.  Your 15 minutes of fame are up  ...

GoldSilverDoc's picture

Technical analysis.

What an interesting idea.  The idea that you can predict, from past results, future results (performance).  The assumption that economics is like chemistry.  Or really, physics.  The hubris of applying mathematical methods developed for physical sciences to economics.  

Sounds like the same kind of thing econometricians do.  Poorly.  And with dismal results.

The idea that the available statistical methodology is appropriate for analysis of google-variate analysis (it isn't).  The idea that you can predict weather years in advance (or months, or even weeks; the physical effects of Earth's orbit around the sun do not apply).

The tools aren't there.  And the results of the technicians, carefully controlled for time, are no better than chance.  They do well, for a time... and then their models fail.  Because they always forget that the singer, singing a Debussy art song, can at any moment DECIDE (the operative word) to switch to "Whole Lotta Lovin".

More interesting than his loony models, and waves, and other BS, is the study of exactly HOW a guy like that gets to manage lots of money (and therefore perform a continuous, genteel act of rape), and continues to do so, even with his record of repeated, abysmal failure.  Now THAT is a subject worth studying.  A kind of "meta-analysis".

AccreditedEYE's picture

Impeccable timing that they put him on right before POMO Tuesday. They discredit the bear case in every way they can.

DoChenRollingBearing's picture

Almost as impeccable as FOFOA's posted article over the weekend, in which he says that Prechter will get his 15 minutes of fame when paper gold and physical gold diverge.

LOL at Prechter.

Spalding_Smailes's picture
Springsteen Omen-
Over the years, Robert Prechter of Elliott Wave International has made some great comparisons between mass social mood, financial markets, and the mood of music and movies.  He's presented exhaustive analysis on how music and movie themes align with the mass social mood of the people.  As I was reading articles about Springsteen's upcoming re-release of "The Darkness" record, I started to wonder how the timing of both releases would present itself in relation to the financial markets.

"Darkness was an angry record. I took the 10 toughest songs I had.I didn't want something with a broader, more compassionate overview. That didn't feel right to me."
Bruce Springsteen (Interview with Edward Norton at the Toronto International Film Festival, Sept. 2010)

The chart below presents the Dow Jones Industrial Average Gold Ratio with the two dates for the release of "Darkness On The Edge Of Town".  My hypothesis proves to be true.  Both releases align with a downward trending cycle.?

bugs_'s picture

Sack vs Prechter

Slothrop's picture

Prechter likes DJIA 1000 because that's where the market broke out in 1982.

goldmiddelfinger's picture

Actually the low was set in August 1982 at 776, The breakout was 802. I'm waiting for the retest to buy in.

goldmiddelfinger's picture

Yeah prob bottom out at ..mmm...let's see.... 1000 ?

Popo's picture

Right now the inflationary game looks pretty clear, but there are potential scenarios under which Prechter could be right.

A military imperitive combined with soaring oil prices for example, would force a reversion to a stronger dollar - and lower markets.

But that's not on the table... Yet, at least.

But we should all be keeping one eye on oil. Because while gold is a great indicator of confidence -- oil is the stuff that matters.

DarkMath's picture

DJIA 1000 means an average P/E of like 1.3. That's insane. But what if he's right? How could that happen? I suppose if deflation sucked in a bunch of dollars as the economy deleverage earnings would decrease as well. So P/E wouldn't go down that far. Maybe they get down to 5. Back of the envelope that would mean the money supply would have to contract by %50.

I guess I could see that happening if 3 or 4 big banks failed then Fannie/Freddie were restructured leaving half of their Bond holders up a creek.

Even though Prechter is a technician the fundamentals of what he's saying could make sense. There would have to be one heck of a bank run for it to happen though. Perhaps if a lot of money started chasing Gold it would drain the blood out of the system to precipitate a collapse.

midtowng's picture

Prechter is a perma-bear, and no one should be perma-anything if they want to be right.

Minion's picture

He advised buying stocks in March 2009......

Rider's picture

He was a bull for decades, now he is bear until the delevaraging cycle is over.

DavosSherman's picture

3,800 Fiat currencies failed - most thanks to printing.


Bob - This time will be different - Prechter. CNBS picks some talent.

IdiotInvestor2's picture

Dow 1000 ?? That's baloney. Dow 1015 might make more sense :-) That I agree with, but 1000, no way. </sarcasm>

As much a bear as I am, these Dow 1000 calls are as nutty as dow 36K calls.

VK's picture

Why? NASDAQ fell 78pc peak to trough, Nikkei fell more than 80pc peak to trough so far. In GD1 the market fell more than 90pc. So why is this time different? Especially now that the US has no savings, is a debtor nation, 77pc of Americans live paycheck to paycheck up from 43pc in 2007. I'm expecting a 95pc decline in the stock market myself. 

goldmiddelfinger's picture

This guy is MUCH better. MUCH better. Esp from 7:00 Scary stuff:






EscapeKey's picture

Meh... I never really bought into technical analysis.

Minion's picture

It's good at timing the short term oscillations, but not the capital waves.  :)

goldmiddelfinger's picture

Therefore it's completely discredited along with the birthers.'s picture

hi Joker, i like your swing coat.

Zerohedge fan's picture


red hair

6' high

cosmo face


currently doing PHD in London

Is that you, my dear?'s picture

nope, got the wrong babe. tall some yoga, want to see?

Minion's picture

He sheds some light on the intense ramp-up to 1500 by the powers that be over the past month - attempting to climb over the top of the long term channel. 

He also claims that .gov's will confiscate profits of short sellers if it get's bad, and promotes gold ownership.  Sounds more realistic, but what about inverse ETF's?  I'm guessing that the markets as we know it will change, bigtime, if a real downturn happens.  It's obvious that governments are desperate to revive the status quo.

goldmiddelfinger's picture

Inny ETFs, futures, puts. That's the way to go. Cant see feds banning hedge products but he's not out on a limb calling for short sale bans. It's been done once and hey, they cancel all the HFT drive bys so it's clear the feds are cool with moving the goal posts now-a-days.

mudduck's picture

His elliott count is wrong. He has the top in 2007 labelled as 3, which would make this a 4th wave (corrective) in which his target is the 100 to 220 level. This would push his 4th wave into his 1st wave level thus violating one of the 3 basic elliott wave rules.

goldmiddelfinger's picture

So use your count. S+P still measures 100-250.

mudduck's picture

So you shill for this guy saying he's much better, he claims to be an elliott wave analyst but his count is unworkable. If he's going to use elliott wave in the title of his web site he might wanna learn it instead of buying a computer to label it for him.

bulldung's picture

Interesting TA. Numbers seem far out if priced in current $, if inflation adjusted or in Gold, not so far out. Key phrase is "destruction of wealth", this has to happen at some point called the end game;either by inflation if the FED gets its way or deflation if there is an overwhelming shift to small govt ideology in the next series of elections.

Lionhead's picture

Co-incidentally, his conventional technical analysis (TA) call corresponds to the cyclic call of Martin Armstrong of 09/22/2010 as the high cycle top. If they both are correct, then owning gold/silver equities like Homestake Mining of the 1930's would be one of the only industries to buy in the S&P 500 in a decline as the metals in the ground are a proxy for refined bullion.

I don't find his video to be scary at all. His AB=CD measured move is run of the mill TA.

rocker's picture

Now that was a sparton of reality.

kengland's picture

He didn't just come out and say "yes...1k." He waffled back and forth and danced...


Either you do or you don't. Christ. Make up your facking mind. Grow some. I happen to agree with Prechter to some extent. Hard deflation to come. Debt exceeds physical currency by a factory of 3-1. That doesn't inlcude the quad of derivatives. He just needs to stand by what he believes

I can excuse Maria for her girlish giggling at the end of the interview because she's hot for her age.

But in terms of her little man sitting next to her, someone should punch that clown in the face. The irony is that they giggled when folks would explain that housing and private equity were in bubbles, so how they can possibley have the curiouge to smirk at that is flat our stupid.


I'll also add that at the close, they attributed the decline eod to Prechter. LMAO. I'm sure the arsewipes on the floor waited with baited breath for what he had to say

puckles's picture

He waffled because his nearer-term prediction is for Dow 3000.  His long-term prediction is quite severe, and if it comes true, well, you had all better make sure your ammo is well supplied.  

I would refrain from dissing Prechter, if I were you.  He alone called the Crash of '87, in the midst of a huge bull run he also predicted.  His Conquer the Crash is eerily prescient.  In essence, he has predicted virtually every move that has occurred since the Great Recession began, except gold.  

I think I know why he went wrong there.  His gold charts do not take into consideration the fact that during the Great Depression, the $ was still more or less anchored to gold (for foreigners), despite FDR's horrific, unprecedented devaluation.  Since 1971, this has not been the case, and the charts have no comparison point as a result.


DarkMath's picture

"I think I know why he went wrong there.  "

I would add he didn't consider the massive manipulation in the Gold market artificially suppressed the price like holding a big fat orange industrial strength thick plastic medicine ball "Deadliest Catch" sized crab pot buoy under water.

Trifecta Man's picture

"He alone" ??  I've seen video of Martin Zweig on Louis Rukeyser's Wall Street tv program fearing a possible crash before the 1987 crash occurred.

And I understand why he was nervous.  Fed tightening interest rates higher, P/Es near 20, the advance-decline line contracting, and the Investor Intelligence survey showing high bulls versus bears.  I got out of stocks the month before.

That was back when fundamentals mattered.  Can't use that system now.  I use another one instead.  It is very simple.  Currently it signals a bull.'s picture

i use to watch louis rukeyser, R.I.P., on friday night, right. stoic men discussions. i remember martin z...weig.

BearOfNH's picture

I remember watching W$W when Marty made his "crash" prediction. Problem is, he made it Friday night after the markets had closed, and the crash happened the following Monday. What you really want is somebody to tell you to sell on August 25, the market top at the time. I don't know anybody who did that, but several folks predicted a big drop beforehand, Prechter and "legs" Garzarelli among them.


Phat Stax's picture

I read the book twice and it was grounded and interesting.  But it was written in 2002.  No one is ever wrong in this business, just early.  That definitely applies to Prechter.  More recently he started calling the top in the markets in August of last year.  Trading on his advice would have been a losing proposition.  No where in his subscriptions did he anticipate 12 months of sideways, range-bound trading.  He has been continuously calling for a major decline since that time.  In April he altered his stance to a slower decline that will take 2-3 more years to unfold.

He speaks well on TV and he and Maria seem to have a good rapport.  He is an acceptable bear to them - but his predictions continue to be early, of not incorrect.  Also, everything is based on a loss of investor confidence which is NOT triggered by a Black Swan event.  Just happens somehow.

sagerxx's picture

Does Robert want to make a little wager on tonight's Monday Night Football game?  I'll give him the Dodgers +1000 points.


Mercury's picture

I'm no expect charist (or much of a bull here) and I'm sure this guy's a genius but saying that the market is going to sell off 90% over six years smacks just a bit of hubris.  I mean, is that a real crystal ball...

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Picked the wrong day to attend to business I guess.... a conga line of great stories on ZH I see...I going to be up 'till 3AM!