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After rallying to a high of $9.92 on March 31, Bally Total Fitness has fallen 75% through August 14. The bear market force behind the collapse was described fully in the February 2004 issue of The Elliott Wave Financial Forecast (see Additional Reference below). The reprieve for the fitness bust lasted longer than expected, but the emergence the new more sedentary impulses of bear market appear to be taking a toll. Bally’s big belly flop is another sign of the victory for downer mood forces discussed here on July 18.

Another important aspect of this story is the profound disinterest among bidders “after a months long auction process.” In April, Club Industry Fitness Business Pro magazine reported that “many private equity firms, other health clubs and real estate investment trusts are interested in scooping up Bally.” Gee, something must have happened between April and August to trigger the transformation to a complete lack of demand. That something is the springing of the liquidity trap described in recent issues of The Elliott Wave Financial Forecast. Bally’s is just an early victim.  It's plunge and scramble for more capital is a window into the chasm between bid and ask prices that will broaden dramatically through the next phase of decline.

February 2004
No Gain, Lots of Pain
Back in the 1980s, one of the very first cultural trends The Elliott Wave Theorist identified as a by-product of the bull market was the move toward physical fitness: “There was a new energy building in the early 1980s, and humans had to express it by running, lifting and jumping up and down.” In the late 1990s, the corresponding forecast was for more sedentary lifestyles to grab hold. The dynamics behind the transformation are described in The Wave Principle of Human Social Behavior (1999). Ample evidence of its arrival is captured in the premier fitness stock, Bally Total fitness, which fell almost 90% to a low of $4.36 in March 2003. Since then, it has rebounded somewhat, but the rally in fitness has been accompanied by all kinds of evidence of a falling rather than a rising underlying trend. Instead of a grassroots jogging or aerobics craze, for instance, the hot new thing in exercise has been toward regimens with bearish overtones such as kick boxing and military style workouts. According to a recent issue of the Wall Street Journal roughly 700 gyms now offer boot-camps:

‘Drop, You Maggot,
and Give Me Twenty’
Gyms Push Extreme Workouts
To Counter Exercise Ennui

Sounds like a good reason not to exercise: Getting up before dawn and crawling around on your belly in Central Park, while getting hollered at by an ex-Navy Seal.
It turns out that a growing number of people are willing to pay good money for workouts like that. In the latest response to the health-club industry’s perpetual dilemma how to keep workout-averse patrons working out gyms and personal trainers are pushing an array of aggressive fitness plans based on everything from U.S. military boot camps, to Soviet-style weightlifting regimens.

In an alternative bear-market survival technique, fitness clubs have embraced the racy sexual mores of the bear market (see August issue), making striptease workouts the new thing. Strip Workouts for Every Woman is a strong seller on Amazon.com. In another effort to literally broaden their appeal, Bally’s has started to highlight “full bodied fashion models” in its ads. “Americans are gaining weight, and health clubs don’t want to be left out.” Many fitness clubs have also added cooking classes to their offerings. In other words, the meager, one-year uptick has more to do with self-indulgence, self-defense and punishment, than self-improvement. The genuine article, a fresh grassroots passion for getting fit, will come again, but not for years and not until people swear off finance as the best road to self-improvement.