"Don’t get caught in bear market warns McLaren
Professional trader and stockmarket commentator Mr Bill McClaren believes
the All Ordinaries Index will suffer a hefty fall this week, but has warned
investors against diving in for bargains. “This is a cyclical bear trend so
there is no point buying on the rebound, he said.
Mr McClaren, who gained a weekly presence on US cable network CNBC after
predicting last years tech crash, said the ASX All Ordinaries Index was
precariously balanced and could fall as low as 2700 this week, a fall of
about 15%. “If this was just a normal bear run with normal circumstances, a
sharp fall would be a time to buy,” he said. “But one of the real problems
that you have when you get into these capitulation moves is that if you buy
when it falls, then you can’t get out. My conern is that amateur investors
will be tempted to jump in and buy, thinking they are getting bargains.
They won’t be getting bargains, they will be getting caught.
Mr McClaren who trades the US equity markets each night from his home in
Byron Bay, said Wall Street was in the grip of a severe bear market. He
said the S&P 500 was poised to fall another 150 points from its current
level and the New York Dow Jones Index was headed for another 500 point
Right now I hate to say it and I don’t want to triger a panic out there,
but the markets have all the signs of a crash scenario”, Mr McClaren said.
Mr McClaren has been recommending his clients liquidate their share
portfolios during July and August. “There’s no reason in the world why we
are not going to see the All Ords go back to the lows hit in March”, he
said. The All Ords hit a low of 3094 in March. Mr McClaren uses the the
charting techniques pioneered by US technical investor Mr W.D.Gann. He
claims that all stock market movements have been seen before and that it is
possible to prepare for the worst by examining the historic data.
At the back of Gann’s book ‘Truth of the Stock tape and Wall Street Stock
Selector’, Gann gives us – available to all who would but read it – the
dates when the major stocks, and hence indices, would change trend. Of
course the forecast of these dates, written in 1928, was for the 1929 year,
included by Jones publishing in the book posthumously. Gann does state
though, the dates are based on a permanent cycle, which does not change.
For Sept, these dates were 2nd/3rd, 16th/17th, 21/24th, 27/28th.
This year, as in previous years, I have found them to work well enough to
trade profitably. The October dates are there, so to Novemeber, December
and on. Future events do time themselves to the past.
The market low on the 24th looks very interesting: 180 degrees from the
previous low Mar 23rd, Equinox, grossly oversold market, 540 deg from the
2000 low, 90 deg from the June eclipse, 270deg from the Dec 2000 eclipse,
the SPI lowed at 2882 (144 x 20), anniversary of a major low in the market
in 2000 at 3170 (3170 - 2882 = 288 = 2 x 144).