As most of you are aware, I base my forecasts 100% on the Behavioral Analysis Model, which is an emotion-driven model that tracks topping and bottoming counts within various time frames. (Think Elliott Wave Theory without the subjectivity factor) 

I also use three other proprietary indicators in order to anticipate the violence of the subsequent price reversal once a top or bottom is identified because I think the violence of a price reversal—more often referred to as “velocity”—is key to my value-add as a forecaster (especially during today’s market participants’ propensity toward excessive leverage.) 

With that in mind, I decided to recap the build up of negative data that led to my call for a TOP in 2007, because the only way for clients to get comfortable both selling strength and buying weakness is to revisit my thoughts and forecasts prior to periods where the model was correctly fading the 2007 market strength. 

As most of you will recall, my ultra-bearish forecast looked pretty silly at times during 2007—especially given that the vast majority of advisory services were raving bullish and only focusing on “breakouts, bullish flows of private equity money, and DOW 16,000,”—but I’m hoping the stock model’s correctness (telling us to use strength as a selling opportunity 20%, 40% and even 80% above current levels) will make it a bit easier to at least entertain the thought that we might be correct in our call for a crash or at least a relentless decline to the 6606 level during 2007-2008 with an eventual decline to the 3971 level over the coming years. 

Full report coming soon