The Mother of All Crashes is Coming to the Stock Markets in 2027 (here's why)

[00:00:00] Bob Prector: What I want to focus on is the fact that the banner cycle projected a likely top by the end of the year 2026. What I think is going to happen is that the bear market is going to be unprecedented. It's going to have to undo all of the overvaluation and mostly undo all of the debt pyramiding that's going on. I think people are going to look back at some point later in this year and say, oh, I guess I see what they were talking about. [00:00:30] Speaker 2: According to the way you're saying things, Bob, we could likely see some kind of a top maybe by the end of this year going to next year, 2026. Would that be correct, more or less? [00:00:39] Bob Prector: What's interesting is that it points to the same year that your banner chart points to, which is 2026. But I think this is a good spot to be looking for the beginning of a bear market. The day we have serious downside AD ratio, you know, 9 to 1, 10 to 1 on the downside, that's going to tell you that the whole rotation game is over. That bear market is definitely here. I am currently as bearish as I can possibly be. [00:01:04] Speaker 2: That bear market could potentially be, I think your view is, it could potentially be as devastating as the dot-com crash that occurred in NASDAQ, which is about 80%. [00:01:13] Bob Prector: It'll be way worse than that. [00:01:14] Speaker 2: Bob, often one of the criticisms I get or responses I get on YouTube from people is that, oh, Bob Prector is too bearish or is always bearish. Would you say that's fair? All right, guys, welcome. We're very special guests. We're honored to have Bob Prector of Elite Wave International. Is it possible or probable that the stock market could potentially top this year? We already know that the banner cycle forecasts the top by the end of this year in 2026. But other things besides the banner cycle, which potentially indicate a likely top in the stock market, if not this year, going to the end of the year in 2027. So we'll discuss this with Bob Prector, who, as I'm sure you know, is by far one of the world's leading experts on Elite Waves, as well as technical analysis. All right, guys, join us. Bob, thank you very much indeed for giving me the opportunity to speak with you again about the stock market. My special guest, Bob Prector, he's the author of some of the leading works, some of the best works on technical analysis. I think one of Bob's most important works is the Socionomic Theory of Finance, which I suggest definitely get that book, guys, and read it. It will change the way you think and you see the markets. Some of you may remember that last year when the stock market collapsed, I said that the market, the S&P, could likely rally 7,200, which it did. And also in September of last year, I put out a video saying that the market, the S&P, could go to 7,446. So this particular wave count has now gained a much higher probability. Based on the data we just looked at, this has significantly increased the likelihood that the market could make new highs in the next several months. Indeed, I've actually plotted here, I've actually pointed out the levels quite clearly on this chart. I'm now looking for the market in the next several months and likely, potentially by the end of this year, to move to the first target. So we could see this wave 5 extend much higher to over the 7,000 level. That's for the 12-month period, which could take us eventually at 7,278. And I think the third important target the market actually could reach, the S&P, in other words, would be this level that Manuel is showing here at 7,446. But next year, again, the next 6 to 12 months. So that is the level I'm looking at right now as an important price objective and target for the market. Bob, often one of the criticisms I get or responses I get on YouTube from people is that, oh, Bob Prector is too bearish. Or is always bearish. Would you say that's fair or what would your response be to that when people say this? [00:03:35] Bob Prector: Well, my first response is they're right. I've been bearish for quite a long time. I got bullish in the first quarter of 2016 and stayed that way until late 2017, 2018, when we got extremely stretched on the upside again. And then if you know your history of the stock market, from January 2018 until March 2020, which is more than two years, it was net lost ground. But part of the problem for me has been the overpricing, the extreme optimism and so forth has dwarfed everything that we've ever recorded, not just by a little bit, but by multiples from past peaks, like 1929, 1968. I mean, there's virtually nothing compared to what we've been seeing for the last 15 years. Yeah, I've been too bearish, but I also think it would have been foolish to be along the stock market. And I still think it's foolish to be along the stock market. On the other hand, I've got a history of being very bullish as well. Back in the late 70s and through the 80s, I was bullish at a time when it looked like stocks were cheap and everybody was afraid and they were all in treasury bills. No, we don't want to gamble in the stock market. Well, that's the kind of opportunity that I like. We haven't seen any decent opportunities. I also turned bullish at within, I think, nine days of the bottom in March of 2009. But I think we were back up like a 50% retracement and I said, OK, that's about enough. So, yeah, I've definitely been too bearish in the last number of years because of the historic overvaluation. What I think is going to happen is that the bear market is going to be unprecedented. It's going to have to undo all of the overvaluation and mostly undo all of the debt pyramiding that's going on. As you know, there's a record margin debt, but there's leverage in other ways. You can buy ETFs that are two and three times leveraged. The big boys are borrowing money overnight so they can gamble, you know, on a penny on the dollar virtually or a dollar on the penny. So the amount of leverage is off the charts. It's going to be an unbelievable, unbelievable event when things finally turned out. If I had it to do over again, would I do something different? I don't think so, because when you see ridiculous overvaluations, I mean, if you were bearish at Bitcoin and when it crossed 50,000, were you a fool? Well, you missed a doubling, more than a doubling. But at the same time, it was insanely overpriced at that time. Well, now we're back to that level. I think people are going to look back at some point later in this year and say, oh, I guess I see what they were talking about, because the leverage is going to unwind on the downside far faster than it built up on the upside. Anyway, we're going to look at some charts and I'm going to let your people look up their own mind. [00:06:35] Speaker 2: So I want to go to our first chart here, Bob. For those of you who are not familiar with this cycle, the Benner cycle, it was devised by a guy called Samuel Benner. Samuel Benner, in the year 1875, he devised this cycle and he projected, essentially based on this cycle, major tops and bottoms and the minor cycle tops and bottoms you can see there. But it's something I do pay attention to, not as a buy signal or a sell signal, by no means. What I want to focus on is the fact that the Benner cycle projected a likely top by the end of the year 2026. And by the way, for people who are watching, these dates or years do not mean the beginning of the years. They mean the end of those years. So that 2026 means Benner was, according to the cycle, potentially seeing a top by the end of the year 2026, which is interesting because this actually correlates with your own work, Bob. You're seeing a potential wave five top. In other words, the wave five of a bull market that started not just in 2009, even though we are looking at one, but also, and this is where I think most people will probably find this very shocking, because you're also seeing the end of a multi-decade bull market that started way back, way back, even before the Great Depression, going back to the 19th century, the 1800s. So if we go all the way back to the 1800s, the bull market that has been going on, the multi-decade bull market, you're seeing a potential wave five top occurring, perhaps by the end of this year, again, going with the Benner cycle. And even if not this year, perhaps maybe stretching to 2027. The bottom line is, though, that according to the way you're seeing things, Bob, we could likely see some kind of a top, maybe by the end of this year, going to next year, 2026, the wave five of this bull market, as we can see there, the Great Depression and so on and so on. And then a bad market lasting decades to, I mean, 2035, 2040s. Again, we'll talk about that. Would that be correct, more or less? Is this more or less what you're seeing in the stock market? [00:08:34] Bob Prector: Now, this is kind of a casual observation. It's not anything you'd want to etch in stone. But I've noticed that the 26-year span has been pretty good at marking turns ever since the Depression of 1896. And what's interesting is that it points to the same year that your Benner chart points to, which is 2026. Yes, it is. And you can see on the bottom left, we had 25 years between the Depression bottom of 1896 and the deep recession. It's like a Great Recession of 1921. And there was 27 years to 1948. This might not look like a big deal, but it's a very big deal because in terms of the S&P PPI ratio, this was the end of the bear market period from 1929. It's called a triangle under Elliot's terminology, not on this chart, but on the when you adjust it for PPI. So that was a deep low. People were extremely bearish. And then 26 years later was the next deepest low, 1974. Then 26 years after that was the 2000 peak. And then are we switching from bottom to top and now from top to top? I guess we'll find out. 26 years from there gives you 2026. So I thought it's worth showing. [00:09:54] Speaker 2: Yeah, Bob, that's a really fascinating, interesting chart. Basically, what that cycle, the 26-year cycle is pointing to is a potential top in the S&P, the stock market, sometime by the end of this year. I mean, I think you also had another chart, which was interesting. [00:10:11] Bob Prector: Yeah, this is the price chart that I wanted to connect to the 2026 time chart. Here we see the main waves, at least as I'm counting them. It's one way to count them anyway, from 1932. And I noticed long ago that the multiple from the 1932 low to the 1937 high was five-thirds to the third power. So you take the low, multiply it by five-thirds to the third power, and you get to the top. Now, why that? Because it's a Fibonacci ratio. It's 1.618, but expressed in fractions. In this case, five-thirds, which is 1.666, et cetera. And then from that low, the wave three high was an eight-fifths to the fifth power multiple of the 9292 low in 1942. So I thought, okay, if those are true, maybe we should be looking for a multiple for the final high in this giant wave five. And we just got to an interesting spot this month, July. And that's where the gain or the rise from the orthodox end of the bear market in August 1982 at 776.92 on the Dow times eight-fifths to the ninth power gives you 53,000 and change. And we just topped at 53,000 and change, or at least we hit 53,000 and change. Whether we've topped there, time will tell. But I think this is a good spot to be looking for the beginning of a bear market. And I think there are plenty of, I mean, countless technical reasons to believe that. The extremities are so great that I'm taking this one to heart. [00:11:51] Speaker 2: Yeah, it's very interesting. I like the way you think there. It's very methodical. And I think what you're pointing out there is a potential top at about, on the Dow, 53,389. Is that correct? [00:12:03] Bob Prector: Yeah. And so far, the intraday high is only 100 points below that. The closing high was 53.055.91, as you can see up there on the upper right. So the previous two actually had lead waves of 2%. This one is very close at 0.6%. [00:12:20] Speaker 2: Lead waves are based on fractals or fractal geometry, which occurs in nature. So you see fractals already out there in nature, like the leaves of a tree, where you get self-similarity or things happening, similar things happening on different scales. The leaves of a tree is a good example, but there are other examples too, like the respiratory system in the body, where you see self-similarity on multiple different scales. And that's essentially what Elliott waves represent, these fractals where you've got waves within waves within waves. Oh, very interesting. [00:12:53] Bob Prector: I think we've got a possible trend line resistance going all the way back to 2024. And interesting, it managed to get through there in June, May and June a couple of times. But in July, it's bumping and bumping and bumping. Meanwhile, the Dow Jones Composite Index made a new all-time high on the 16th of July. But the S&P didn't do it. The Nasdaq didn't do it. And I think they're breaking down. We'll see. [00:13:17] Speaker 2: My personal view on the stock market and the S&P is that there are some indications that the stock market could potentially push further or higher this year, despite a correction. I mean, there may be a correction in the, maybe a pullback of some sort in the short term in the next several weeks or months. But because the NYSE advanced decline line has not shown any divergences, it's still going higher. The advanced decline line made new highs. That's still keeping me relatively bullish on the market for the end of the year. But I'm willing to change my mind if, for example, the market were to drop below a key support level. Don't get me wrong here. I'm on the same page with you about the long-term outlook for the stock market, Bob. I think you're correct. The banner cycle, as well as your work as well, both indicate a likely top coming in the stock market by the end of this year. Perhaps it might stretch even to 2027. So that I think you're correct about. I'm just, I think between now and the end of the year, December, I still think there is potential for more upside despite any short-term corrections and pullbacks. So I'm not ruling out the possibility of new highs perhaps by the end of the year. What do you say about that, Bob? Go ahead. [00:14:29] Bob Prector: Advanced decline figures, to me, were the very best indicator in the stock market through all of my career until they went to decimal pricing. And then all the indicators that I used that were breadth-based started to act differently. Trin is a great example, the trading index, which is the AD divided by the upside-downside volume ratio, right? Yeah. That was incredibly reliable to tell you the underlying buying power and selling pressure in the market on an intraday basis, daily basis, you know, and on a moving average basis, it was a great indicator. One of the things that helped me call the top in early October 1987 was an overbought trend. Ever since I went to decimal pricing, it just stopped. I hardly look at it anymore. Sometimes it goes the opposite of the way it used to go. The market will be screaming on the upside and trend will be like 250 instead of 0.25 and vice versa. I'm like, okay, it just doesn't work anymore. The other thing is, if the market has been parabolic, which I think is true for many of the individual stocks and some of the indexes like the SOX index, semiconductor index, parabolas just stop. And when they reverse, it's over. So I think that all that mania enthusiasm for the various tech stocks especially, but some of the areas as well, has been pushing the whole mindset up in a parabolic way. And I think it's already slowed to the point where warning signals are flashing because a parabola can't slow down. It slows down. It means I'm reversing. And so I think we're somewhere between the slowdown and the reversal, depending on which index you look at. The day we have serious downside AD ratio, you know, 9 to 1, 10 to 1 of the downside, that's going to tell you that the whole rotation game is over. Bear market is definitely here. So keep an eye out for that. Until then, you're right. It could float if it wants. I am currently as bearish as I can possibly be. I wouldn't want to wait to bet on, you know, like be long waiting for any new highs. I wouldn't even cross my mind. So we'll see. We had similar talk about Bitcoin back in 24, and you were right. It edged up higher for another number of months. So we'll see how this one turns out. [00:16:48] Speaker 2: And just last point to finish. If we enter a bear market by, let's say, the end of this year, that bear market could potentially be, I think your view is, it could potentially be as devastating as the dot-com crash that occurred in the NASDAQ, which is about 80%. [00:17:02] Bob Prector: Oh, it'll be way worse than that. We're so much more overvalued, so much crazier. The amount of investing done by the public, especially on leverage, is insane. The number of puts and calls traded is the highest ever, especially on the call side. We have record foreign buying. They've now committed a trillion dollars in the past year to the stock market and up their total to $20 trillion. And you can track foreign buying going back 50 years, and every time the stock market nears the top, the foreigners rush in there. And now they're rushing it at a record rate. Every indicator we have, we could have spent today showing 50 sentiment indicators and how extreme they are historically. They're all just crazily overdone. So when the turn happens, it's going to be stunning. It's going to make the downturn in Bitcoin look like nothing. [00:17:58] Speaker 2: True. [00:17:59] Bob Prector: Yeah, absolutely. That's my view. Take it or leave it. I've had that view for a while. [00:18:04] Speaker ?: Yeah. [00:18:04] Speaker 2: Thanks, Bob. No, I really appreciate it. And it's always great to have you in these videos. Guys, go ahead and check out Bob's phenomenal offer, which he asked for you for the Elite Wave International newsletter. You get access to Bob's Elite Wave Theorist, as well as the short-term forecast and also the financial forecast, all for one month for only $11. The link for the special offer and discount is right there for you. So that's EliteWave.com forward slash LSEO. I'll put the link for you guys in the description. Go ahead and check it out. I think it's a great offer. And you can actually test drive Bob's newsletter, and you can try it out. Check it out. I think you'll really like it. I myself, by the way, Bob, I read your newsletter every month when it comes out, when you put out the updates. It's phenomenal. It's fantastic. Yeah, guys, go ahead and check it out. The link, again, is in the description. Again, that's EliteWave.com forward slash LSEO. Thanks very much, Bob. Really appreciate it. [00:18:49] Bob Prector: Yeah, it's been fun.