They usually have the daily volume numbers posted by now, but not today. I am most curious as to the Nasdaq numbers, of course. My guess is that, when I get the numbers, there will be a huge drop in the positive number but the negative number will remain the same. For us to reach even a temporary bottom, we need people to go short, lots of them. But of course the market did what it had to do to have that not happen by falling so precipitously. What that does is it freezes those who might go short into inaction. They're thinking no way do I want to go short now because there's bound to be a huge rebound, even if it's temporary. So they wait for the rebound that never comes. And down and down we go.
We are in crash mode. This is what Jerry Favors talked about for years. Below is a chart I've posted before on my blog. I first noticed the huge head-and-shoulders pattern that stretches from 2000 to the present about a year ago. I was stunned. I've only heard this pattern mentioned once on everything I've read in the last year, even though it's the most basic of charting patterns. This pattern usually means you're at a major top. You see them all over the place. For example, if you look at the Dow or really any of the major indexes for this year, you'll see the same pattern. We will crash down until we get to some strong support. And if you look at the chart, you'll see the last time before 2000 that we were doing anything but going straight up was back in the 1970s, when we basically went sideways for years. The top of that area is around the 1,000 mark, the bottom down to like 600, I think it is. So that's where I got the 1,000 number that I tossed out there as where this all could be heading.
The head-and-shoulders pattern is basically a training period. You go up to a high, then a steep drop, causing many to panic sell. Then when they do, we head back up to an even higher high, that high coming at the all-time high in 2007. Then we had another steep drop, more panic selling at the bottom, even though the so-called experts were saying to "stay the course." And then once again we turn back up, making anyone who got out feel very stupid. Never again, they say. No matter what happens, I'm staying the course. So now we came up yet again to our high this past April, and now we're crashing downward. This time, unfortunately, will be different. For this thing to stop, people have to panic sell. But this time the long-term investors will go, no, no, I've seen this before a couple times, I'm not getting out this time. And down and down we go.
Jerry did have a positive message, although it won't help us for a while. That message was that when we finally reach a bottom of this greatest of all crashes, we will turn up and go up for years and years and years, probably decades. That is of course because we will only reach that bottom when the last of the long-term investors finally throw in the towel and say they are never, ever getting in the market again for as long as they live. And up we'll go. If you're a long-term investor, you may be saying you'll never throw in the towel. Sadly, everyone has their breaking point. You will, eventually.
Again, I'm not giving advice. As soon as you get out, millions of other people probably will on the same day, and we'll head up, making you feel stupid, at least temporarily. It may be impossible to beat this thing no matter how you play it. I continue to pray that I'm totally wrong on all this stuff.
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