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HS Dent Great Depression Ahead Book Update #4
Friday, September 11, 2009
We have been looking for this bear market rally in stocks to peak between late July and mid September. Now we are at mid September and the market has continued to edge up near our optimal sell targets at 9,650 - 9,800 on the Dow and 1050 - 1060 on the S&P 500.
We have already seen a 50% retracement of the losses in the S&P 500 and a 38% retracement in the Dow which are classic for bear market rallies. It also appears that the Shanghai Composite in China has peaked near 3,500 and it has led this rally but is now failing to make new highs.
To summarize: stocks look like they are topping and the U.S. dollar looks like it is near a bottom with strong support at 76 on the Dollar Index. Most bearish forecasters expect the dollar to crash, but note that in the last crash the dollar rallied for many reasons too hard to explain here that we cover in our newsletter.
The stock market has been edging up in the absence of bad news, but the odds of negative news should be rising as our last positive short term 10 month cycle peaks here in mid September. All things considered, this seems the best place to sell stocks for those that have not already.
Our Decennial and 4-Year Cycles in Chapter 3 of the book point down from around here into late 2010. We expect a stock crash that could take the Dow as low as 1,800 - 3,800 between August and October of 2010.
Conservative investors can sell stocks and simply play it safe in a T-bill account, while more aggressive investors can simply bet against the stock market by buying an ETF like SH that goes short against the S&P 500 index with no leverage.
The US dollar is a more moderate play and can be bought through an ETF like UUP.