Professor Elam

4/4/2025

The Bear is Here to Stay

Eventually we will find a bottom and start to recover, I hope.

Senator John Kennedy today

This column has warmed pf a massive top forming in the markets.  It is happening now.

An old saying holds that markets are governed by hope, fear, and greed.

The Senator is already at the hope level.  I would add another emotion between greed and hope. That emotion would be complacency. And that is where we are now with the majority of investors.

The reason for this complacency is that the brevity of the most recent bear markets.  The dot.com and the sub-prime bears lasted about two years. There are near no brokers or investors who weathered the nine years of 1973-1982 The Industrials peaked just over 1,000 in 1973. By 1982 they were trading about 800. Elliott Wave Theory suggests we are in for a similar lengthy period of stagnation. A perfect example of this complacency was last week’s example of Charles Payne on Fox saying the market was a screaming buy.

There is always a fundamental event to justify the technical suggestion of Elliott. In this case it is the Trump tariff scheme. From a political standpoint this is a loser. The reason is that none is aware of being ‘ripped off’ as Trump puts it. Everyone will be aware of a sustained stock market retreat not to mention higher prices from retaliatory tariffs.

The Clay and Buck radio show suggests today that one not watch their  401K value all the time. People, they said, tend to sell at the bottom. This is exactly my point. Most will not sell until the fear mode when real panic  has set in. That is a long way off.  The time to sell is now and retreat to to the safety of Treasury bills.

The sell-off has erased all the gains in the Industrials since last August.  The selling is so severe that both the Industrials and the NASD 100 gapped down on the open, even after the big drop Thursday.

The  prices of stocks, gold, silver, and oil have all dropped significantly. As with the 1930s. this is the onset of deflation, something most are not prepared for.  Crude oil just traded for $62.30, the lowest price since last September.  The charts suggest this is not a bottom. This bodes ill for the Permian Basin. The energy ETF XLE has collapsed from the recent high of 94 to 79. The selling has intensified all day with the Industrials now down over 2,000 points. Bond prices are rising as money flows from stocks to bonds. This set-up is similar to October 987 leading to the market crash the following Monday.  Trump is already calling for the FED  to lower rates given the panic he helped start.

Dennis.elam@att.net