Crash Starting in a Few Weeks?

I've been busy, and sick, so I got way behind on this blog. We are continuing to trace out a pattern last seen as we climbed to the final high in 2007. That final high in 2007 came at the end of October, I believe. And I think there's a good chance that will happen here as well. I read an article saying the same thing I've heard many times, how October can be a tough month for stocks. And that if we can just make it through October, we can look forward to the Santa Claus rally. When I read an article like that, I figure there's a good chance we'll have a high at the end of October. We'll see.

We still have our solid head and shoulders pattern that I fear will lead to economic disaster real soon. You may have heard that the leader of Iran was saying the end of capitalism was near. I definitely believe he had economic advisors who recognize something as basic as a head and shoulders pattern telling him that it was indeed possible that the U.S. stock market was about to totally crash. Maybe enough people will doubt the market because of that, thus making us continue up.

However, that's not what's happening. The all-important Nasdaq numbers are now well above 2.00 and staying there, getting up to 2.52, 2.41 and 2.60 at the end of September. It's been above 2.00 for 11 straight market days now. We would normally be falling with numbers like that ... unless we were climbing to a final important high. Since the Nasdaq numbers got up to an amazing 4.10 at both of the last major two highs, I think there's a good chance that that is the target for this most important final high. So we still have to climb into the 3's and then the final move up to 4, which I suspect will be it. This final rally could be quite dazzling as we shoot up, discarding die-hard short sellers along the way.

I took a depo recently in a divorce case. It was the depo of the financial advisor to the husband and wife before and at the time of the divorce. The wife had a new boyfriend who was an economist who was saying the market was going to continue lower than the lows of March 2009, so she somehow got control of some funds and sold everything, much to the dismay of the husband, who wanted to stay the course, as the financial advisor was strongly suggesting. So lots of talk at the depo about if they had just stayed the course instead of getting out, how much more money they'd have right now. The witness talked about holding seminars around the time of the market turmoil, counseling the attendees to stay the course. Anybody who got out feels totally stupid. Anybody who stayed in feels very smart. Guess what's going to happen this next time around.

Wish I had time to go through the antics of the $200 million man. I can show how his actions or inactions explain every single up and down move for weeks, except for one day, a giant up day that came within a day or two of the most recent important low. As of Friday, he is out of the market.

I don't mention the Dow up and down funds much because they don't always follow this inverse pattern that I'm talking about. I mainly watch the Dow funds to see if it ever goes positive, meaning more money in the positive Dow fund than in the negative Dow fund. There is almost always more money on the down side than the up side, except at important highs. You'll only see more money on the positive side a couple times a year, the last time being at the high at the end of April. Since then, it's been negative, until this past Friday, October 8, when it went positive. So I think we're either at that final high or two or three weeks away at the most. And all I can say is, I hope and pray I'm wrong about what might follow.

Rob