It seems unlikely that the US market isn’t in for that long expected crash.
The rest of the world is already there.
This is where the international markets stood on Wednesday 10th before yet more falls:
This leaves me expecting the Dow to head for 14000 and the Nasdaq, once again falling from bubble like highs, to perhaps levels between 3000 and 3500. The S&P in a crash scenario should hit 1600, perhaps around 1500.
It sounds ugly but crashes are natural. They have always happened and always will.
When markets crash all the crooks get exposed, most of the gamblers get burnt. Legends afre written, scapegoats are found and run out of town on a rail. However the fundamental reasons of it all are abstract.
Randomness makes market soar and plummet.
The search for narrative, of goodies and baddies, winners and losers is a human need and a kind of superstition.
Systems have risk and risk causes volatility. Volatility in turn often creates reinforcing vibrations that build into waves we call booms and slumps. There is no god Poseidon in this sea calling up the storms.
Regulators try to intervene and set a scene where the water is always calm, but no small group of wise elders can stop the ocean of the markets from rising into tempests. The best they can do is build harbours but if we are caught out to sea when a crash comes there is no one to turn to and blame.
If this is the crash I’ve been calling and I don’t claim omniscience, then it wont be the end of the world.
People will say it is, but it won’t be.
It will instead be a tremendous buying opportunity. Don’t try to buy the exact bottom, wait till its happened and everyone is crying in misery, then buy slowly and carefully.
So the following chart is my evidence that this crash will not be the end of the world but just another staging post to further growth.
I could say, it always is, but here is a chart that gives you the decision to call global doom or look to the next rally.
It’s the Nikeii 225.
My first novel back during the credit crunch is all about a trader that spots indexes are going to zero. That can only mean Armageddon.
Well here is the chart of the Nikkei doing just that.
Clear it can’t be the end of Japan. Instead the chartist has to draw a bullish trend which indicates markets will recover solidly after this is over.
So don’t buy the dip, buy the crash. It looks like its here, so aim, hold your fire and wait till you see the blood on the street.