Meet the new boss, same as the old boss. Smile and grin at the change all around. The change it had to come, we knew it all along, then I’ll get on my knees and pray we don’t get fooled again, writes Jeff Greenblatt. He's presenting at TradersExpo New York March 10.

It’s a little out of order but The Who wrote this back in 1971. Do you realize the Dow peaked on October 3 yet was down almost 6% for the year? That is a bear which is only 3 months old.

So, what am I expecting for 2019? The bear is the new boss and will remain so throughout this coming year. Does that mean there won’t be a major rally? The markets rallied for six months after 9/11 yet it was totally retraced.

Consider the bubble popped in March 2000 so it was 18 months before 9/11. Depending on how much more we fall will determine the size of the bear market rally to come. But here’s what we need to consider right now. Does anyone really believe we had the fear washout low over the holidays?

The vibrations were okay, not great. What I think happened is the crowd got scared when they saw the big drop on Christmas Eve, the CBOE Volatility Index (VIX) spiked and there was a bunch of short covering right after Christmas. Consider the Dow was down over 650 points the day before Christmas in a half holiday trading day session. That’s astounding.

Can you remember the stock market ever putting in a significant low during the Christmas lighter volume trading period?

To really understand what is going on right now I suggest two books which should be required reading for every trader and investor. Put the Democrats and Republicans aside and look deeper.

One many of you know about is The Creature from Jekyll Island by G. Edward Griffin which is the study of how central banking families created the Federal Reserve. It is so much more than that, it truly explains how the banking system works as well as an in-depth view of some of the more important events of history these past hundred years. Excerpt here in PDF download.

The other book is called The Fourth Turning by Neil Howe and William Strauss. This book came out over 20 years ago (1997) and I was amazed to watch a C-SPAN interview from 1997 on YouTube where the authors all but predicted the condition the country is in right now.

The book is a study of the stages of a human life and ties it together with the various generational cycles. As far as the West is concerned, they’ve tied these cycles back to the 1400s.

The book talks about an 80 cycle which calls for crisis and we’ve seen it play out with the Great Depression/WWII, the Civil War and back to the American Revolution. They discussed the U.S. being in a crisis that could work out for the good or bad.

There could be a major war and reset but the bottom line is the U.S. is entering the kind of crisis of sustainability as we know it similar to the major events described above.

What does that do for us? The bull market is over. Traders and investors are making the same mistakes they made in 2000 and 2008. It’s astounding we are going through this for the third time in less than 20 years, yet the crowd got fooled again.

We are in the crucible right now. This is a year that is going to set the stage for the election in 2020 which could set the course for the next decade or more. Stocks are not on sale. It’s very likely this will be full blown bear year.

Recently I discussed the potential larger low in the oil market. The move off the low has been weak but it is finally lifting off the runway. The calculation on the long-term view is a bull move of 50.85 up and now a low at 150 weeks.

chart

The first tick for the stock market was down but then recovered. It’s still shaky with an unsteady low.

My gut tells me we’ll get the next down leg by default on a failed attempt to go higher. That could be happening right now with the leg off the low from last week.

As far as the bigger picture is concerned, I believe its important to realize the markets are being impacted by larger forces none of us have seen in our trading careers.

As I told you previously, Peter Eliades said the period from November through next summer is the meat on the bone part for bulls as far as the presidential cycle is concerned. His concern as well as mine was how much these bigger forces would influence the action.

In December we got our answer.

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