Dow Theory - Elliott Wave's "older brother" - says bear market will resume for next phase down: Tim Wood

Dow Theorist and cycles analyst Tim Wood (whose Cycles News & Views site is in my list at right) has penned some update thought on how to view equities and gold now, in Market Observation - Tim W. Wood 10.23.2009 at http://www.financialsense.com/Market/wrapup.htm. R.N. Elliott was aware of Dow Theory and essentially expanded on it quite a bit in developing Elliott Wave theory back in the 1930's. This is an interesting topic because of the big picture. Tim Wood points out that in Dow Theory, as confirmed by Richard Russell, we've only seen the first phase of the bear market, with the second and deeper phase yet to come. He's got some additional data points to go along with his assertions - so here's a quote (use the above link for the full article):

From a value perspective, history shows that the dividend yield and the P/E will be roughly at par at true bear market bottoms. As an example, I show that the yield on the S&P at the 1932 low was 10.5 with a P/E just under 10. At the 1942 low the yield was 8.71 with a P/E of 7.3. At the 1974 bear market bottom I show the yield on the S&P to have been at 5.9 with a P/E of 7.24. Even at the 1982 low the yield was 6.2 with a P/E of 6.9. At the March 2009 low I show the yield on the S&P to have been at 3.58 with a P/E of 24, which has historically been considered overvalued. At present, I show the yield on the S&P to be 1.99 with a P/E of 144.83. Yes, that is right. The current P/E, based on Generally Accepted Accounting Principle, is one hundred forty four. The historical P/E ratios at the previous lows were also calculated using Generally Accepted Accounting Principles, so these numbers are consistent. If you are seeing any other number showing much lower P/E's it is because it is a George Orwellian phony bologna calculation. If the S&P were to trade with a GAAP P/E of 20, which has historically been considered overvalued, it would be at 150. If the S&P were to trade with a P/E of 15, which has historically been considered to be fair value, it would trade at 113. My point here is that at the March low the P/E and the yield were no where near par and thus the market did not reach levels in which true secular bear market bottoms are made. Plus, with the spread between the current P/E and the yield at an historic 142, the market is grossly overvalued. This will ultimately be corrected with the Phase II and Phase III declines. If you have not read my article on Bull and Bear market phasing I urge you to read the August 14th Market Observation.