Market Predictions: Is the Big Bear Coming?

09/16/2007 12:00 am EST

Focus: MARKETS

Larry Pesavento

Chief Investment Strategist, Trading Tutor

In an interview at The Forex Trading Expo Las Vegas, Larry Pesavento, chief investment strategist, Trading Tutor, discussed an extremely important market cycle that is occurring right now.

On August 16, the Dow reached a momentous cycle condition that has been repeated over and over again since the market began trading in 1792. This combination of several cycles coming together is the largest such event since July 5, 1932, when the market bottomed after the big crash - when the Dow dropped from 383 in September 1929, to a low of 40 in 1932.

The current cycle is similar to the bottom of the 1982 cycle and the top of 1987. Larry noted that investors must take note if this bottom is broken, an event that has never occurred during the market's 200+ year history. If that happens, it could signal a very severe bear market, perhaps 8,000-9,000 on the Dow.

Larry remarked that while the public is generally unaware of these cycles, they are very important and commonly used by major banks, hedge funds, and even NASA.

The next big cycle is due in 2017, which also coincides with the end of the Mayan calendar, often predicted as the period in which the world will end. Larry's not making any such predictions, but he noted that it is certain to mark another important date for Wall Street.

At this point, Larry suggested that it would be a good idea for investors to reevaluate where they are financially, just in case the worse does occur.

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