CRASH ALERT UPDATE
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
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
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
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).
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
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.
The stock market fell below critical support today. If a reversal
does not occur soon, a panic-driven freefall in prices should be
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
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.