October is a famous for market crashes. Will this October see another CRASH?
When you look at sectors, such as energy, retail, small cap stocks, the crash is already on the way.
While all the pundits talk about earnings, and an allegedly great economy, they don’t look at what really matters: a sudden, sharp deterioration of the global economies. The numbers we look at suggest that in September, the major economies in Europe and Asia started falling off of the cliff. The “official” numbers won’t surface until it is too late for investors to save themselves.
This recent top of September 19, whether it’s an intermediate term or a long term top, was actually predicted by us as early as April, to coincide with the ALIBABA IPO. That forecast was also made by us on CNBC on April 21: http://cnb.cx/1hw7p3G
We have predicted the most important market declines over the past 37 years, including the Crash of 1987, the bursting of the internet bubble in 2000, and the global financial crisis of 2008-2009.
Our analysis suggests that the conditions for another severe market plunge are in place. Of course, that doesn’t mean it is written in stone. All the fundamentals Wall Street’s bullish analysts cite are history. You can’t drive a car looking into the rear view mirror. BERT DOHMEN looks at what is going to be, not what was.
You see, market plunges or crashes occur when the vast majority of money managers are positioned for a continued market rise and are highly leveraged. That’s when an orderly market decline turns into a crash.
Currently, the numbers show that all the big money managers are over-invested and over-leveraged. Margin debt and negative balances in stock accounts are at all-time highs. When the markets decline severely, it forces involuntary selling just to meet margin calls. And that can lead to a self-feeding plunge. It has nothing to do with earnings, growth, and all the statistics the bulls refer to.
The major indices hit first technical support levels and will now have a bounce. (See chart below). If there is a longer term rally, it could come after the election. The chart shows that the S&P 500 index reached support at the 150 day moving average (red line). That’s natural support for a bounce or rally.
This brings great opportunities to active traders. More money can be made faster during market plunges than during bull markets. Our subscribers to our various services, from PRIVATE PORTFOLIOS, SMARTE TRADER (for stock traders) and the FEARLESS ETF TRADER, are already making very nice profits as they did during the panic of 2008. And when a good rally appears ahead, our subscribers will know what to do.
Stay tuned, or consider subscribing to one of our valuable services. We guarantee you won’t find anything more rewarding anywhere, at any price.
Bert Dohmen, Founder
Dohmen Capital Research, Inc.