Ask Colin

Which Dow phase are we currently in (early 2001) and when are we likely to see an entry point?

My reading of the Dow Phase Analysis is that we are in stage 1 of a Bear market - the abandonment of hope. I say this because we have clearly passed the top in the Nasdaq index and started down.

We are seeing lots of profit warnings, which are the signs that the ridiculous hopes on which speculation was based are being crushed by emerging reality. Each time there is a major profit warning, the stock concerned falls sharply and drags the market down with it. To some extent the same thing is happening in the so-called old economy.

As for time, I frankly have no idea. Bear markets tend to be shorter than bull markets, but the greater the bubble the longer to erase it. It also depends on how governments deal with the wreckage.

However, it has been a long bull market, so I expect a longish bear market. I am not inclined to rush into rallies, because I think there will be plenty of time to get set unless there is a panic sell-off like 1974.