In Elliott wave terms, Robert Prechter makes a strong case that the stock market recovery which began in Mar. 2009 (in wave notation is called 'Primary 2') ended last week(*). From here another downturn (Primary 3) should unfold that by percentage is at least as big as that of Oct. 2007 down to Mar. 2009 (known as Primary 1). That allows us to outline the *minimum* decline for the DJIA and S&P500:
DJIA - below 4936 (base figures shown below)
S&P500 - below 483
More accurate estimates are forthcoming as the wave form progresses.
For better or worse, this decline (Primary 3) will likely be faster than before, taking 12 - 15 months instead of 17. Afterward there will be two more waves: another recovery (Primary 4) that will bring back a portion of this decline, but probably not reach up to the previous lows of Mar. 2009 (DJIA 6470, S&P 667); and another relatively small decline (Primary 5) that will probably set even lower lows than the ones we're headed for now.
Instead of waiting on dribs and drabs from me, a *much* better discussion and explanation of all this is written in Robert Prechter's volume, "Conquer the Crash", just updated Nov. 9, 2009. On Amazon search for "Conquer the Crash 2009". It is three 'books' in one volume. Book 1 discusses a bit of stock market and economic history and introduces how to read and anticipate Elliot waves as apply. Book 2 is Prechter's advice on what's going to happen to most of our asset classes and the financial products based on them. If you're going to buy this volume, read Book 2 first as there's precious little time to follow its advice to avoid being hurt by the instruments it discusses (insurance policies, annuities, stocks, bonds, etc.). Book 3 is a collection of essays from the last several years of Prechter's newsletters, demonstrating that he understood exactly what was happening with houses, stocks, bonds, metals and currencies well before they displayed their price behaviors in their markets.
If anyone wants to see clips of Prechter's interview on CNBC or Bloomberg TV, etc., just open up YouTube and search for 'CNBC Prechter' or 'Bloomberg Prechter'. The interviews I found range from Nov. 2009 back into fall 2007.
(*) As we know, the markets go where the markets go. It is possible to misread the wave patterns in progress and mis-anticipate their next moves; meaning, I can't promise they won't set new highs this week. But Prechter did not miss the call of Primary 1 down when it began in Oct. 2007 and he didn't miss the call of Primary 2 when it began Mar. 2009, so I'm willing to go with his assertion that Primary 3 down is on now.
S&P500. Peaked in Oct. 2007 at 1576 (all figures intraday, rounded). From there it fell into Mar. 2009 at 667, a 58% loss (end of Primary 1). It recovered to Jan. 2010 at 1150 (end of Primary 2). Another loss of at least 58% will take it below 483 (which will be the end of its Primary 3).
DJIA. Peaked in Oct. 2007 at 14198 (all figures intraday, rounded). From there it fell into Mar. 2009 at 6470, a 54% loss (end of Primary 1). It recovered to Jan. 2010 at 10730 (end of Primary 2). Another loss of at least 54% will take it below 4936 (which will be the end of its Primary 3).