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The final frontier of the great social euphoria, as represented by a voracious pulbic interest in space exploration, appears to be close at hand. This quote from August 1997, when the stock market was also reaching a short-term top, documents the front edge of the long-term peak. The back edge was on display at the Space 2006 conference in San Jose last week, where space entrepreneurs “floated” a host of ideas ranging from moon shuttles to more asteroid mining schemes. We can almost hear the imaginations of attendees whirling out of control. “An asteroid is coming. It will be very close in 2019. Quick get the mineral rights!” “Scientists believe Asteroid 3554 is full of valuable metals like nickel and platinum.” Apparently, it has not occurred to these people that you can get that stuff here on earth. The chairman of the Space Foundation figures the 3554's metals can “generate $20 trillion in revenue.” “That would be a pretty big financial payoff. That would make you 450 times wealthier than Bill Gates." If only it wouldn’t cost so many more that to get the non-precious metals back to earth. These aspirations are an extension of the same high tech fantasies that gripped many as the Dow Jones Industrial Average hit its all-time peak in January 2000. At that time, The Elliott Wave Financial Forecast observed a much broader public infatuation, one that focused primarily on the Internet but also included the new visions of space tourism. We dubbed it “techno-reverie” and said it was a sure sign that a peak was at hand. In some ways, the countertrend rally signal is even more powerful as it is an even more highly developed dream. Flush with capital accumulated over the course of a long bull market, wealthy space tourists are literally hurling themselves into the heavens just for the rush. At the lows, when the extraterrestrial aspirations have completely expired, developers of the first space hotels will wonder, “What the hell were we thinking?”

After literally exploding on re-entry and being grounded when stocks were at close to their lows in 2003, the U.S. space shuttle program has gotten back in business over the last two years. The space station, which many were ready to dismantle at the bottom in 2002/2003, was actually expanded as stocks chugged approached their countertrend highs. The shuttle’s rebounding prominence should be short lived. As EWFF explained in 2003, “A falling trend quenches the desire for science and scientific exploration.” We cited the waning popularity of science fiction as a subtle symptom of an underlying loss of momentum and quoted a science fiction writer who stated, “Incredibly, young people no longer find the real future exciting. They no longer instinctively lust to go to space.” We added, “The aftereffects of the stock market rally may get the shuttle back in orbit. But the shuttle’s next run will be its shortest yet. As the bear market wears on, disdain for NASA’s ‘risk-taking’ culture and a public obsession with more earthly matters will probably ground it for a long time.” The waning strength of the rising trend is evident in the steady stream of technical glitches and the public's dissipating interest. A campus paper says, “NASA should re-examine its priorities before it loses the imaginations of a new generation.” As the bear market boldly goes where no bear market has gone before, it won’t matter what NASA does.

January 2000, EWFF
Technology Bubbles Revisited
In Internet paper, they really do hold something of great value: the ultimate proof that human psychology is the real fundamental. This item from Robert Farrell at Merrill Lynch explains what we mean: stocks of companies losing money rose 52% for 1999, while stocks of companies actually making money in 1999 were down 2%!.

Since Internet stocks account for almost all of the gains among the money losers, it is an unavoidable fact that a psychological state, the belief in the future profitability of the Internet, has held the market up through the latest phase of the mania. This dependence on the future prosperity of an emerging technology is an interesting place for the mania to wind up because almost since its inception, The Elliott Wave Theorist has noted that the most important peaks of the last 200 years have been bound up in periods of intense technological advance. Specifically, we have referred to the peak of Supercycle (I) in 1835, Supercycle (III) in 1929 and Cycle III of (V) in 1966. Even if the Internet is all that it is cracked up to be, the pattern at each of these past peaks suggests that the current prices have probably accounted for decades of future growth. After the peak of Supercycle I, for instance, stock prices (at least of companies that survived) did not return to 1835 levels for 28 years. Compared to the innovations of that era, electricity, photography, blast furnaces for the mass production of iron and indoor plumbing, the Internet is no more than a refinement of existing technology. The great hopes of the 1920s, like commercial air flight and radio, were also fulfilled. Still, a long-term chart of RCA illustrates the tremendous human capacity for pricing 40 years of growth into one euphoric moment. We showed it in the May 1999 issue of The Elliott Wave Theorist. From its top in 1929, RCA declined 97%.

Of course, amidst the techno-reverie at all these peaks, there were many more wildly speculative visions that did not come to pass. In the “electrical euphoria” of 1835, the public got so wrapped up in this “magic fluid” that many sent the current coursing through their bodies, and others speculated on the eventual development of an engine that would never expire. From 1966 through late 1968, the same kind of wonderment became a popular form of entertainment. On a prime-time TV show, futurists envisioned colonies on the moon, the conversion of sea water to drinking water and the use of artificial moons. The passage into 2000 has been accompanied by a similar wave of super-bullish forecasts. The enchantment with the prospects for the human race is stamped clearly on a special multi-color Saturday January 1, 2000 issue of The Wall Street Journal. In blazing letters, the front-page headline announces: “The Amazing Future.” According to a vast array of recent accounts, everything from poverty to unfulfilled sexual fantasies to common diseases will become things of the past. The basis for all this hopeful anticipation is apparent in a 200-page booklet on the potential for a “long boom” in the global economy published by the Organization for Economic Co-Operation and Development. It begins, “One of the most promising and commonly evoked vistas of the future centers on the dazzling potential of new technologies.”

Obviously, there is no way to measure the extent and ultimate effect of a shared dream that dwells so deeply in the human imagination, but there is one indicator that can offer some perspective. According to the Business Week and Time magazine cover-story studies of Paul Montgomery (Universal Economics, Newport News, Va., 800-338-8948), a single cover story has a strong record of marking a trend change in the fortunes of a profiled firm, sector or market. In technology and, more precisely, the Internet, we have a subject that has become an almost continual focus. The Internet accounted for more than a third of Business Week’s 1999 covers. In addition, the web has been the object of a whole new series of BW supplements. “We started out thinking we would do four of about 36 pages,” said the magazine’s editor of its plan for 1999. “Demand was so strong that we produced five, each running about 100 pages. In 2000, we’ll publish nine times.” He ends by saying, “This is just the beginning. There is a New Economy out there (so presciently chronicled in the pages of Business Week).” There is no precedent for it, but a succession of 17 cover stories and Business Week’s fundamental belief and commitment to the field is a powerful signal of a long-term trend extreme for the sector. The potential for a huge reversal was seconded by similar covers in Time. The fourth quarter started with “GET RICH.COM” and ended with the president of Amazon.com as the “Person of the Year.” On an even longer-term basis, the selection of Einstein as Time’s man of the century was another confirmation of the near-total social infatuation with science. In a bear market, reason, technology and science do not get the same respect. The prominence of its recent veneration suggests that a flight from them may be just around the corner.