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For those of you who did not see the rather campy movie “King Kong vs. Godzilla,” Godzilla seems to dominate the battle until the somewhat smaller King Kong is empowered by lightning strikes in a storm. Kong then seems to take the upper hand as he pounds on Godzilla. CNBC’s “Fast Money” has been having fun with this analogy as it applied to recent market turmoil, and it will serve to help us further illustrate our case here.
This article is a follow up to the article “The Approaching Grand Supercycle Top,” published in the most recent 2007 Spring/Summer issue of Tradersworld magazine. It was based on an Elliott Wave model I developed in the Spring of 1998, which has successfully projected every major top and bottom in the Dow in time and/or price since. I argued that we were close approaching the end of a long American market cycle that began around the time of the birth of our nation, and that it will be exhausting itself roughly 233 Fibonacci years later.