Stock Market Negative Outlook

Stock Market Negative Outlook

January 12, 2008

by Eric L. Prentis, author of "The Astute Investor" and
"The Astute Speculator."

The S&P 500 Index Nine Month Moving Average Trend Line is
pointing downward, for the first time since 2000-2003, and
the confirming indicators signify that the stock market is
in Stage 1: Mark-Down – Downtrend (please see chapter 4 in
"The Astute Investor" for a discussion of the four stock
market stages).

Please either click on or highlight and copy the following
URL address and then paste it in your web browser to see
the S&P 500 Index graph with a downward sloping nine month
MA trend line shown in blue.

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=SP500&freq=3&compidx=aaaaa%3A0&comp=&ma=3&maval=2%2C9&uf=0&lf=4&type=4&time=11&style=320&startdate=&enddate=&size=4&lf2=0&lf3=0

The S&P Index experienced a head and shoulders reversal
pattern with the peak closing price of 1565 occurring on
October 9, 2007. The downward sloping S&P 500 Index Nine
Month Moving Average Trend Line is forecasting a negative
stock market outlook and that a US recession will occur in
2008, probably beginning in April, which will cause the
stock market to fall precipitously from the current S&P 500
Index level of 1,401 (probably retesting, during the next
two years leading into 2009, the 2002 S&P 500 Index low of
769 which is a 45 percent drop in stock prices from these
levels).

Required Strategy Now

The correct strategy to maximize profits during a Stage 1:
Mark-Down – Downtrend is to abandon a long-short market
neutral strategy appropriate during Stage 4: Distribution –
Topping or Rounding Over and only be short equities, please
see chapter 2 in "The Astute Speculator" for the correct
common stock shorting procedure.

Copyright (c) 2004-2008 by Eric L. Prentis. All Rights
Reserved. Disclaimer: Data presented are expected to be
factual, however, no warranties are in effect. Gains or
losses from stock investing or speculating are possible.
Positive results are never assured, regardless of the
techniques used, and no guarantees are given. Please
perform your own due diligence and consult your registered
financial adviser prior to investing or speculating.