First let's look at a few charts that are quite interesting.
THE FIRST CHART IS MONTHLY FOR THE DOW 1929 THROUGH 1942
The vertical lines are 1/8 and 1/3 divisions of 90 and you can see the 1937 high was 90 months. The next bull market didn't start until 1942 or 150 months from the 1929 high.
NOW LET'S LOOK AT THE CURRENT NASDAQ CHART FROM 2000 THROUGH 2014
So far this trend has been exactly the same not close but exactly. The 2007 high was also 90 months from the 2000 high. We can expect this bear trend to last out to 2012/2013 with a 270 calendar day to one year bull trend between then and now. If it matched the 1929 through 1942 period or 150 months that works out to September 2012.
NOW LET'S LOOK AT THE S&P 500 FUTURES DAILY CHART
My forecast called for either a three or four day rally ending with an exhaustion of some sort followed by a new low. If the rally could exceed four days then a test of the January high at 950 would occur, followed by a new low that could end the bear trend. There was a big gap up and a gap down the past two days indicating an exhaustion of some sort within the time window. There now needs to be "follow through" to the downside to confirm the counter trend completion. One of the troubling aspects about the new low forecast is it has become consensus so there should be a surprise. If there is a new low it will only be for a few days and pop back up.
Deflation is nothing more than a huge contraction of credit caused by a massive decline in the value of balance sheets. It will take a 5 year cycle from the high in 2007 to re-capitalize the consumer, banks and business balance sheets providing the government doesn't do something to delay the process as was done in Japan.
One solution that must be attended to is bankers running banks and banks only function must be to lend not underwrite. Combining banks with brokerage and investment banking is one of the major problems that brought on this crisis. Those operations need to be separated again.