Prechter Goes All-IN At 200% Short
Today, around noontime, Robert Prechter announced he has moved to a 200% position short. Here's the link to the article, it's pretty self explanatory.
I've followed Prechter for a very long time and he has made some classic mistakes. His biggest mistake so far was in 1988 when he stayed too Bearish for too long after the 1987 crash. Even I knew he was wrong on that call and I was just learning about crashes for the first time. This may be a repeat, but with Black Friday coming this Friday and the McClellan Oscillator acting very poorly, Prechter might just be right this time as there is plenty of evidence of technical deterioration in markets, not the least of which is the performance of the McClellan Summation Index, which looks absolutely sickly.
People will always ask "What will be the catalyst". It could be almost anything this time around. It could be a very bad Black Friday, it could be a Bond Market reaction which raises interest rates, it could be a spike in the Dollar or a drop in the Gold Price. It could be nearly anything at this point. So why guess. Most of what Prechter studies is wave forms and time cycles. Even wave forms are now pointing down as well. I think the main point is to stay alert this week and next week and really pay attention. We could even see some kind of contrived event (God Forbid), as we saw in 1987 when markets sold off on a bad Trade number, which later on turned out to be completely meaningless in the face of very good Q4 Earnings in 1987. I've seen so many of these declines materialize out of thin air that I barely notice the alibi anymore.