CRASH ALERT

As predicted last week, the stock market has entered a panic sell- off since the major indexes broke below critical support on July 11th. Yesterday the DJIA dropped 160 points and today the heaviest trading ever occurred as the Dow fell nearly 200 points and then recovered to close little changed. The rising, record trading volume and wild gyrations in stock prices mean a panic is now underway. The question is whether or not the worst is over or is a '29 or '87 collapse about to take place.

The Elliott Wave Grand Supercycle peak was a double-top in the S&P 500 index along a 60-year Supercycle upper trendline (see my ). Since the secondary peak on May 22nd, the stock market apparently has entered a wave-C collapse (in the context of a larger scale wave-1). This collapse could take months to playout (possibly into the seasonally dangerous September/October period), or might resolve immediately.

Notably, in 1929 and 1987 the stock market crashed going into the Fibonacci 55th day after the peaks in those years. Accordingly, 55 days after May 22nd leads to today. Thus, an initial selling panic in the wake of the Grand Supercycle peak might have climaxed today or is going to climax in the next few days, particularly tomorrow.

Peter Eliades, who correctly predicted the May 22nd top (see or his recent with ), recently forecast that July 15th to 17th would involve a major cyclical resolution- i.e., an important low-point should be reached during this period. Thus, we might have already reached an important low or tomorrow could involve a selling climax.

In 1929 and 1987, the climactic selling "Black" days involved trading volume three times what occurred at the market tops in those years. Accordingly, an intial selling climax to the current stock market slide, if it is going to parallel the 1929 and 1987 markets, should involve trading volume around 1.2 billion shares given that around 400 million shares traded at the time of the February and May record highs.

All in all, if the 1929 and 1987 crash pattern is repeating here (even though it is off-season), then a full-scale stock market crash might occur tomorrow or at least in the immediate future. Such a crash, if a historical parallel, should involve a drop of around twenty percent on daily trading volume of more than a billion shares (although trading curbs might limit this).

J. Adams
Update: 7/15/96

The DJIA fell over 160 points today. This, on top of last week's slide, suggests the Grand Supercycle bear market is underway. Indeed, today the Dow fell below its Supercycle upper trendline- a most ominous development in terms of the Elliott Wave Principle.

The odds are that the stock market's downturn is in anticipation of an avalanche of bad news. Keep in mind that Elliott Waves in stock prices are simply reflections of underlying swings in mass mood. As Robert Prechter points out in his most recent book, , this time around the collapse in mass mood will be unlike anything experienced in recorded human history. Thus, one should likewise expect some of the worst news in human history.

As for a stock crash, the potential for a selling climax this week is high- although seasonality suggests a major bottom won't likely reached until September/October. Indeed, it may even come tomorrow. Tomorrow is the 55th day after the May 22nd all-time closing high in the DJIA (May 23rd was the all-time intraday high). As I have mentioned before, in both 1929 and 1987, the stock market crashed into the Fibonacci 55th day after the record peaks in those years. Thus, the historical crash pattern may be repeating itself here.

What's more certain is that the stock market's breakdown is signalling that the economy is turning into at least a recession and more likely a depression. has been indicating an approaching recession for several months. Now that corporate earnings are starting to pullback, Wall Street is beginning realize what lies ahead such that panic is setting in. (Note how this model anticipated a recession that was seemingly caused by Iraq's August 1990 invasion of Kuwait and the Persian Gulf crisis. This reflects how all world affairs are part of the cycles of mass mood identified as business cycles, Kondratieff Waves, Elliott Waves, etc.)

What is really frightening, however, is that "The Crash" will likely involve negative news outside of financial affairs. Indeed, as explained in , one possibility is that political turmoil and a hardline coup is imminent in Russia. In association with this, one should expect flashpoints like the Balkans, the Persian Gulf, Korea and the Middle East to soon be ignited (see my ).

All in all, the Grand Supercycle bear market has apparently begun, so you might want to stay tuned to the for continuing insight into just what sort of grizzly the world is now dealing with.

                              CRASH ALERT



                               J. Adams

                            Update: 7/11/96



    The stock market fell below critical support today.  If a reversal

does not occur soon,  a panic-driven  freefall  in  prices  should  be

expected.

    In  my previous "Crash Alert",  I was looking for a crash into the

new moon planetary alignment on June 16th.  It now appears  that  this

new moon along with the most recent full "blue" moon,  were associated

with a final,  relative high-point in  investor  expectations.  Now  a

sharp drop is underway as we approach this weekend's new moon.

    As    detailed    in    today's    AstroEcon    "Opening     Bell"

(http://home.cynet.net/astroecon),  tomorrow  there  is  a rare triple

combination of exact planetary "midpoints".  This might be  associated

with frenzied activity on Wall Street, i.e., a possible crash.

    It is interesting how Big Bad Bertha may strike the U.S.  mainland

at  the same time the midpoint combo is going to occur.  I'm amazed by

how time and time again  such  natural  phenomena  effect  society  in

association  with  astroharmonics  and  major moves in mass mood.  The

astroharmonic waves of collective emotion that give  rise  to  Elliott

Waves  in  stock prices apparently are connected with all phenomena in

the natural world.

    A potential source of negative mass mood  in  the  near-future  is

Korea.  The Russian elections,  which I thought might be trouble, have

passed without major event.  Thus,  a source of collective upset might

be a flashpoint like Korea.

    As I've explained in previous articles,  there are weather factors

that are likely incorporated into North Korean plans to  invade  South

Korea  (see "The Most Dangerous Place On Earth" in 'U.S.  News & World

Report'- 6/94).  Accordingly,  the most likely time for the  North  to

launch  a surprise attack is either around January or around July.  In

January,  the Korean countryside is frozen over allowing North  Korean

tanks  to  easily  cross  into the South.  Around July (from late-June

through August),  monsoonal rains shroud Korea in  cloud  cover.  This

cloud  cover  impedes the use of South Korea's air superiority to stop

invading North Korean forces.  Since the  South  is  counting  on  air

power  to stop short a surprise attack,  it is strategic for the North

to move sometime around July.  Indeed,  the monsoon  rain  season  was

likely why North Korea chose to invade the South in late-June of 1950.

    That  North  Korea  is about to invade South Korea is suggested by

its moves over the last  year  or  so.  Late  last  year  North  Korea

finished  preparations for an invasion.  Next,  the North began making

peaceful gestures toward the  West  while  highlighting  its  supposed

internal  distress  caused  by a large-scale famine.  This secured the

element of surprise for an eventual attack.  In  recent  months  North

Korea  revoked  the  Korean  War  armistice,  effectively  ending  the

ceasefire that ended the Korean War more than forty  years  ago.  This

was  followed  by  provocative armed incursions into the Demilitarized

Zone separating the two Koreas.  The most recent major event was  when

a  North Korean fighter jet,  supposedly flown by a defector,  crossed

into the South.  The last couple of moves by North Korea  desensitized

South  Korea to what might soon be actual invading North Korean troops

and warplanes.

    All in all,  North Korea has been carefully setting the stage  for

an invasion of South Korea.  Given the role weather factors might play

in  planning  such  an invasion,  the current monsoonal rain season in

Korea could be used as a cover for the North to  attack.  Furthermore,

the  exact  time of an attack would likely be around the time of a new

moon- possibly the one this weekend (actually, I think the new moon is

Monday,  but I would expect an attack to occur on a Sunday since  this

is when South Korea would be more open to an attack).



    If,  indeed,  a  North Korean invasion of South Korea is imminent,

then this would explain why  stock  prices  are  starting  to  reverse

sharply.  The  collective  mood  always  turns  down  prior  to and in

anticipation of major negative world events.  For  instance,  consider

July of 1990,  when the DJIA peaked at 3000 and then reversed sharply.

Next, in early-August of that year,  Iraq invaded Kuwait precipitating

the Persian Gulf crisis, a twenty percent drop in stock prices and the

last  economic  recession.   Thus,  stock  prices  turned  down  first

followed by world events in the form of war.  If such a pattern is now

repeating,  then a leading  reversal  in  stock  prices  is  currently

underway  in  anticipation  of  a negative world event- possibly North

Korea invading South Korea.