Phase II bear markets give investors the false impression that the economy has turned the corner, that stocks are a safe bet again. This phase of the secular bear market is still upon us.
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New York, NY (PRWEB) January 02, 2012
According to Michael Lombardi, lead contributor to the popular financial newsletter Profit Confidential, the stock market is in a secular bear market, which means that there could be a big drop for the Dow Jones Industrial Average.
Lombardi believes there are three phases to a secular bear market, with the current rally being Phase II.
“Phase I of a bear market, often referred to as the first down-leg, brings stock prices crashing down,” says Lombardi. From its high of 14,164 in October 2007, the Dow Jones Industrial Average had crashed to 6,440 by March 2009; a 55% drop. “This phase of the secular bear market is behind us.”
“Phase II of the bear market, often referred to as the ‘rebound,’ started in March of 2009,” Lombardi writes in Profit Confidential. The Dow Jones Industrial Average has risen 89% since March 9, 2009. “Phase II bear markets give investors the false impression that the economy has turned the corner, that stocks are a safe bet again. This phase of the secular bear market is still upon us.”
“Phase III of the secular bear market is when stock prices come crashing down again, back to the point at which the bear market started or lower,” says Lombardi.
If his analysis is correct, the Dow Jones Industrial Average could fall to 6,440, or approximately 50% below where the stock market sits today.
Lombardi believes that, regardless of the attempts by the governments and central banks to pump money into the financial system, the natural forces of a secular bear market will eventually play themselves out.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.