The stock market slide isn't over yet

Recent moves in the stock markets show beyond doubt that we are experiencing a bear market of historic proportions. So how far do we have left to go, and what does it mean for investors?

These past two weeks have been of considerable importance. The ongoing optimism that the stock markets had bottomed, and that it was only upside from here, has given way to the reality that those lows, seen by the consensus to be secure, have broken down. Psychologically, nothing worse can happen; it's the kind of condition which, if it develops further - as we expect it to - will cause many investors to abandon all hope. And so it will lead into the third and last phase of the "primary" bear market which could take major stock markets of the world down as much as another 50% - a view that we have long held and often repeated.

In the previous issue of the threesixty newsletter, number 589, we published the Dow Jones Industrial Average and the Dow Jones Transport Index, demonstrating Dow Theory. We said then "One or two more bad days could lead to a breach of the support levels which will deliver a new Dow Theory primary bear market signal." We said the two levels were 7,800 and 2,867. Both levels have gone, and so we do have a new primary bear market signal of considerable merit.

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