With the tech laden Nasdaq index falling to a nine month's low yesterday, traders have now recognized what I reported a couple days after the May 10 Fed meeting: we are in a Bear market.

How serious will this Bear actually be is still to be resolved; but suffice it to say that my forecast of several months ago for Dow = 8800 is looking very good.

In fact if you wish to revisit my predictions for 2006, you will note that most of them " as far out as they seemed at the time - have been spot on.

During my travel day yesterday, the Dow fell -167 points (-1.52 pct). I missed most of that but I had forecast in the Week in Review last weekend that this week would be particularly tough on the Bulls, which it has been.

It's hard to say whether the current sell-off in equities is going to turn out to be the Big One, but I do believe that there will be a single week where the Dow drops 1,000 points. So are you prepared for that?

Were you surprised months ago when I told you I had gone to about 75 pct cash with most of the balance in precious metals related holdings? Well the bottom line is that I am not affected by falling prices. I sleep at night.

A month ago I co-authored a paper with Edward Liu of RiskFile that indicated our assessment that the economic data in the U.S. would weaken significantly more than almost any of you were prepared to accept. Today, that trend is being recognized.

What I am saying is that we have to look ahead, and I don't think many of you have.

Say the Dow 30 Industrial Index drops from 10,850 to 8,800 in the next couple months. That would be a decline of -18.9 pct from here. From 11,667 on or about May 10th, that would be a decline of -24.6 pct, which compared to prior Bear markets is average, and certainly not remarkable.

So to round the numbers, the Bear could be about -25 pct off the top and -20 pct off the current level. The average Bear is about nine months say, and we are two months into it. That means there will be lots of market angst to come.

With all I have on my mind today regarding business matters, and being a little tired from the trip after returning last evening, I'm not likely to blog much today. I need the break plus the time to catch up on other matters.

In the meantime I hope the regular commenters and others join in because I'm sure the readers enjoy and appreciate your contributions.

One thing though is to try to refrain from making hurtful comments, particularly of a political or cultural nature. The recent geopolitical events obviously raise the emotions of all people, so while I don't ask for "political correctness" " I'd never do that " I do think we ought to appreciate the enormous complexities of the social issues facing the world today.

When I write about "social equity", I intend to mean basically one thing, which is that we treat others the way we want them to treat us. My philosophy has little or nothing to do with politics and culture.

With regard to markets, these geopolitical issues are impacting the oil price. The problem I see with recent media reporting is that off-hand statements like "some people are saying that oil will soon trade at $100" are being used in headlines and segues to their reports. Who are these "people"? Isn't this reporting just cheerleading.

Worse, it may be that the emotional coverage of the oil market and the Middle East problems is possibly an attempt by certain vested interests to cause an emotional spike at the bottom of a bear phase in equities so that a bullish recovery can commence? This is how the market is made to play people.

And you thought it was the other way around!

I think, at all times but particularly so today, we need the mass media to focus on accurate reporting of the news. In thinking about this, perhaps editors can ponder the low journalistic standards their services have fallen too. Walter Cronkite has a lot to say about this topic.

With the precious metals spot prices up again, and the U.S. equity futures poised to rebound today, the goldminer and prospector stocks are likely to move higher now. If you have been watching RSI on selected miners, now is probably as good a time as any to make a Buy trade.

Yesterday, with every index, sub-index, and stock group down in the U.S., it was hard for stocks to make any headway. At times like this, the highest beta issues are almost always sold off first. Margin calls also affect these share prices, given that there is more margin used for tech and precious metals than say for financials and consumers.

That's all for now. Here are the four Dow components reported on by Value Line. The links are here.

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General Electric [GICS 20, Dow 30, Cara 100]
(GE: Yahoo Finance file)
(GE: StockChart chart)
(GE: Investertech chart)
(GE: ADVFN Financial Data)(GE: ADVFN Financial Data)
(GE: Value Line Report Jul. 14: next one is due Oct. 13)

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Hewlett-Packard [GICS 45, Dow 30]
(HPQ: Yahoo Finance file)
(HPQ: StockChart chart)
(HPQ: Investertech chart)
(HPQ: ADVFN Financial Data)(HPQ: ADVFN Financial Data)
(HPQ: Value Line Report Jul. 14: next one is due Oct. 13)

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IBM [GICS 45, Dow 30]
(IBM: Yahoo Finance file)
(IBM: StockChart chart)
(IBM: Investertech chart)
(IBM: ADVFN Financial Data)(IBM: ADVFN Financial Data)
(IBM: Value Line Report Jul. 14: next one is due Oct. 13)

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Intel [GICS 45, Dow 30, Cara 100]
(INTC: Yahoo Finance file)
(INTC: StockChart chart)
(INTC: Investertech chart)
(INTC: ADVFN Financial Data)
(INTC: ADVFN Financial Data)
(INTC: Value Line Report Jul. 14: next one is due Oct. 13)

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