Friday saw the Dow close below the lower band of its trading range. I accepted this as a bearish indication. When an item closes below a major big number such as 17000, it is usual for the item to decline to test the next big number. The next lower big number on the Dow is 16000. I don’t expect the Dow to collapse or crash down to 16000. In fact, I think we could see the Dow fluctuate around for a time before making its way down to 16000. My brilliant friend, Gary Shilling, believes we are in a period of ten years during which the world will deleverage and deflate. Gary believes that we have passed through six of the ten years, and that we have another four years of deflation and deleveraging to go.
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