Set Up For A Stock Market Crash

Last week I posted 30 bearish indicators here. Since then equities have begun to sell off and change trend after historic and solar-maximum inspired levitation. There is a long way to go to mean-revert, wash-out or fulfil these indicators, but that can be achieved in a shorter timescale with the help of HFT by way of a crash or waterfall declines.

Within that list of indicators we see identification similar to the backdrop to the May 2010 flash crash, and I posted about that here.

We see a similar price pattern into the flash crash repeated here too:


Source: James Goode

We also see identification similar to the Nasdaq peak in 2000, before a flash crash and waterfall declines:



And the same applies to the Nikkei 1989 and solar maximum.

Additionally, recall that major declines in history have often initiated following a weekend, where equities sold off into the Friday close, and market participants have time to stew Saturday and Sunday. Stocks sold off into the close on Friday, in a fairly decisive Thu-Fri trend change.

Recall that the biggest decline days in history have typically occurred close to new moons and full moons. This coming Tuesday is a full moon.

Recall that geomagnetism is bearish for the stock market. We have been experiencing geomagnetic disturbance both Saturday and Sunday this weekend.

Recall that periods of heavy falls in the stock market have typically occurred in the inverted geomagnetic seasonal lows of March/April and October. This is April.

In short, the set-up is here for a crash or waterfall declines, and the greatest potential lies in Mon April 14 – Tues April 15 (tomorrow and Tuesday) for a major historic down day. I balance that with certain short term indicators suggestive of bounce potential, and were that to occur we might look to around the new moon of April 28th for fulfillment. But the crash set up is there for tomorrow, so let’s see.


67 thoughts on “Set Up For A Stock Market Crash

  1. Hi John, Dow has started down trend i agree and higher high above 4-Apr-14 looks difficult however lot of indicators I track are oversold and suggest sideways/mild up move for the next week (14-Apr to 17-Apr).
    Real action may happen in the week of 21-Apr to 25-Apr?

  2. John are you still envisioning your original scenario – a crash to around 1200 then a rebound to around 1600 -then additional drops ?? Thanks

  3. Hey John

    Hope your right. I’ve been expecting April 14th crash for months.

    The only Monday in this Puetz crash window.

    1. I don’t think John ever indicated Dow 260,000 by 2032. It goes against demographics though that’d be in alignment for Warren Buffet’s recent remarks. That would be an exponential rate of change. I doubt that’d happen without disruptions to currency markets and supply/demand basics.

  4. Tuesdays full moon will be the first of four consecutive Total Lunar Eclipse’s called a tetrad which will occur over the next 2 years. This is a rare event that will not occur again for another 100 years. Have you found any geomagnetic or lunar correlations to these events with any effect on the markets or global economy in general?

  5. Wed, APRIL 16th = 9540 (360 x 26.5) solar degrees from OCT 19th 1987. IF a crash occurs Mon-Wed it also vibrates off the most notorious day in recent stock market history.

  6. Look at the black arrows on that chart, marking out the secular stocks bulls. Note how they increase in steepness as the last century progressed. Note also that this is a log scale chart. That suggests the secular bull lasting from 2009 to 2032 is going to be jaw-dropping in nominal terms. As it happens, the nominal increases in each historic secular bull show a pattern (5-fold, 10-fold and 20-fold, in order) that suggests it may terminate around 2032 with a 40-fold increase from the low that occurred around the turn of 2009. That gives us a target of Dow 260,000.

      1. This was a post from 2 years ago prior to any of my demographic research, so rather invalid now. By demographics we should see a deflation secular bear through to the next solar max. Thereafter when demographics turn up and central bank inflationary policies have been baked in we may see runaway inflation and a massive nominal Dow. But all very long term speculative.

  7. Thanks for the 2010 parallel on SPX, John.

    Hope it is of some use to supplement your view, the momentum correlation between Fed asset growth vs. SPX (from 2010):

  8. 04/11/2014 The markets have tumbled in the last few days and yet I ask myself why? The economy is growing. The world is nervous but it’s always that way. Are we approaching a bear market, a decline of at least 20% from a peak? I can’t see any reason for that. Thus, I think this is just the market flushing out the weak, getting rid of the enthusiasm before a new up-leg begins. I’m still looking for the markets to rise over the next two weeks. If you look at the Fibonacci retracements from the January move up, you’ll see they are about 50% down. Thus I think we’re close to a turn higher, so I’m looking at this as an opportunity to buy the dip.

      1. Again you are drawing conclusions of too few observations for it to have more significance than the wing laps of a butterfly affecting the stock market. I am sure that during the hyper inflationary bull run in Weimar Germany all these indicators were max. In a real bull market oscillators only indicate dips. The lag of the solar cycle as shown by lunatic trader and many others make it a very vague indicator as well as looking to the past and curve fitting an occurrence many years ago. When someone has 100 arguments for something I think it makes sense to go the other way, especially when each argument is bases on only few observations. The market has had a hell of a run but we are in a bull market you know…

    1. Robert – I tend to agree with your assessment – a collection of historical observations does not make a story – we are in a bull market, that will have some dips. I just don’t see the catalyst for a major crash, some minor corrections, yes, but crash no. Now if current political winds seriously change so that we see major geo-political action or perhaps a catastrophic even on US soil, then yes…

    2. Hi Robert,
      I agree
      As you say in a later post…. its a Bull Market.
      And it remains a Bull until it becomes a Bear.
      And it will only become a Bear when Interest rates are positive…. at least 5%.
      Until that point is reached ,all those 10000 baby boomers who retire every day must find a return on their money that is livable.
      And the only livable return is in Equities.

      1. That’s dangerous thinking Bob – what’s to say someone doesn’t pull the rug out on the boomers before the interest rate hikes?

  9. Not sure what happened there but that post dropped the “sarc”. Probably because I enclosed it in angle brackets?

    It should read:

    Not sure if ths is sarc or not?

  10. If markets correct 20-30% in 2014, when do people expect them to return to today’s lofty heights? Also, what do people expect will happen to Gold?

  11. Robert, price action alone tells me that this is more than just a blip before new all time highs.
    Todays price action will IMO be nothing but but a relief rally that forms a bearish flag leading to new lows for this move.
    As far as drawing conclusions from too few observations, well quite frankly that comment stuns me!
    Try the list in the link for starters and then add a bursting biotech bubble along with small cap bubble burst. European markets making lower lows along with Japan and global equities are telling all is not right.
    Let,s not forget that crprate buy backs on cheap money are masking the real story.
    GDP is not meeting anywhere near forecasts, do I need go on?

    1. Should read:

      Robert, price action alone tells me that this is nothing more than just a blip before making new lows.

      Sorry it’s way past my bedtime here.

  12. ROBERT i agree, buy this dip, looking at hourly dow chart both recent dips are the same length which is typical of an ABC correrction, new highs are on the way

  13. Clark: Tks for your feedback on the Puetz crash window. One further point to add to your rule about a crash occurring one month (30 days?) on either side of the solar eclipse when the solar eclipse comes before a lunar eclipse. This is a rule I put together after reading other posters comments.

    “When a solar eclipse is followed by a lunar eclipse; the crash window is 6 weeks before the lunar eclipse and 3 days after the lunar eclipse.”

    I thought the above rule to be fairly comprehensive’ although you would expand it further after the solar eclipse by a few weeks. Also, I cannot find any clearly stated rule in the literature on the internet.

    All this has the be tested and I was actually surprised by the positive results.

    1. .

      I looked through my notes to try to find some exceptions. There is one. In 1857 there was a panic. There was a lunar eclipse on September 4, a solar eclipse on September 18, and a lunar eclipse on October 3.

      I don’t have any charts of the 1857 panic; there may be none available. But I have read the history of it in some history books (not market related books in other words). The panic was set off when Ohio Life failed on August 24, 1857. The history books state that the panic got some relief going into early September, (perhaps similar to how the market got some relief today going into the lunar eclipse). Thereafter, the panic worsened through the time between the lunar and solar eclpses, reaching its bottom on October 13/14, 1857.

      Some other instances where the lunar eclipse was followed by the solar are The bursting of the Holland Tulip Bubble in 1637 and Grant’s Panic in 1884.

      I had mentioned the similarity to 1930 and 2011. This one seems similar to both of those. In some respects, I look at the current situation as being similar to 1930 because both are rebounds out of crashes, though this one is much longer. And we could look at this as being the second rebound out of the 2008/9 crash, the first one having ended in 2011. The SPX in terms of gold actually bottomed at the low of the August 2011 crash, having gone down for 11 years from 1999. Which shows how incredibly distorted things are when measured in terms of fiat.

      As far as how this one will behave between the eclipses, I don’t have any good guesses. The fact that it is rebounding into the lunar might mean it could turn here and crash all the way through the eclipses and beyond like it did in 1857

      1. This is a quote from one the books that covers the 1857 panic:

        “A brief rally took place at the beginning of September; then the panic worsened. On the ninth a run on the banks for more redemptions began, and on the thirteenth depositors came in crowds to demand their money.”

        These dates were 5 and 9 days after a lunar eclipse that preceded a solar and would be equivalent to April 20 and 24, 2014.

        Falls right inside the Cardinal Grand Cross also.


  14. Guys 21st April is the date to look.
    An incredible Cardinal Grand Cross is going to happen on that date, Astrologically speaking. Something very special and rare in the past – .

    So I am expecting some special event between the 18th and 25th April which will trigger the crash. My forecast are similar to John for a 1200 target on Sp500.
    Let’s see what happen.

    Thanks a lot John for what you are sharing with us !

  15. Again shorts were nervous in last 30 minutes of session today… So now we have clear A-B-C decline from the top in SPX cash and futures where A=C for 60 points. Higher low was made this afternoon. So there was some buying on the premise correction is over. Selling should resume on Wednesday or maybe even tomorrow. Great opportunity to open new shorts in my opinion.

    1. I would agree with you. There are too many traders pushing the ABC decline and very few considering the option of a 1-2-i-ii. A bearish reversal tomorrow on turnaround Tuesday would be perfect and ironic.

  16. Short have been wrong for like 2.5 years on this site. Persistent. Think we rally to new highs from here. Locals in S&P pit took a lot of bullish positions today.

  17. What I find interesting in comparison to the 1857 case is the Ohio Life news broke 11 days before the lunar eclipse. Similarly, our market topped on April 4 on the employment report, also 11 days before the lunar eclipse. In both cases, there appears to have been some relief into the lunar eclipse.

  18. Clark/Henry: Many thanks for the details of your posts. For your consideration,
    here is a chart showing that stocks actually peaked circa 1852? (details are hard to see on this chart) before the actual panic.

    Click to access Kondratieff_Cycle_Chart.pdf

    And in 1852 there was a Solar eclipse on June 17 followed by a Lunar eclipse on July 1. I once had a monthly chart from Securities Research Corp published back during the bicentennial in 1976; showing 200 years of stock market history. Wish I still had it!

    1. I believe stock did peak in 1852. If the US were still on a gold standard, stocks would have peaked in 1999, so I see some good reasons to examine the secondary peaks like 1857.

      Another thing that came to mind after posting that was some analysis I had read from Chris Carolan about Springtime Panics versus Fall Panics. There’s a copy of that at the end of this link.

      Click to access Carolan,%20C.%20(1998)_%20Spiral%20Calendar%20-Theory.pdf

      Since the 1857 Panic was a Fall Panic it may not be right to try to make an exact comparison. For example, if the market tops and turns tomorrow, the panic climax could occur near the May full moon, for example, instead of near the new moon.

      My bias is that since this is such a huge house of cards, the crash could occur in 2 stages instead of 1. Previous crashes like 1929 and 1987 were 3 waves and 1 crash. I am considering the possibility that this crash will be 5 waves instead and 2 crashes – a flash crash to kick it off, a brief few days of respite, then a 1929 style crash to finish it.

  19. If the SPX/DOW close in the red or close to they will sport one UGLY UGLY candle given its relation to the 50dma and previous price action.

  20. John,

    Did you notice, that the top was at 25 of Feb, exactly 26.5 year after the 1987 top? A 6-week crash would lead us into the 19th of April, so my best crash aim is for 20th of April.


  21. NEXT COUPLE DAYS ARE SO CRITCAL i still think abc correction and new highs, great volitilty today and yesterday which is always precursor for big move. i respect johns work but think u got to keep an open mind and after 15 yrs full time trading I DONT READ ANY NEWS!!!! and read lots of blogs for fun… at end of day just look at the chart

    stick to the above and make your living

  22. Another day, another quite dramatic short squeeze(s), morning and afternoon. Looks like weak hands among bears capitulated.
    On the other hand it looks like these were quite dramatic attempts to retake broken SPX 1842 support.
    If we get SPX close above 1850 tomorrow it could be sign to close shorts but discipline is required and for now I still think fast decline is ahead of us.

  23. This is how bonkers this market is, Italian bond yields closed at a record low!! Spanish yields are same as USA (both ugly bitches) but come on. Greece at 5% and over subscribed aaaaaarrrrggghhhhh

  24. Spanish government bonds, for example, are less risky than leaving your money in the bank; sorry, “G-SIFI”. There’s uncertainty with a government bond, but there’s no uncertainty that some of your bank deposit will be bailed-in. Owning shares in major companies could increasingly be seen as a safety net too.

  25. The action today smacks of intervention. The indices were well on their way to having one of the worst technical days since 2008. All major US indices were IMO nearing crash potential until buyers stepped in for absolutely NO reason.
    I know Fed intervention is controversial but this has Fed intervention written all over it. They knew exactly what was unfolding.

    Look at the European indices and what no intervention meant to them. They may delay but won’t stave off the inevitable.

    1. Not only the action didn’t smack of intervention, but the move from 271 to around DJIA 100 smacked of bears desperation, throwing kitchen sink at the market, as if it was a trend day and a down channel! NO, trend day down doesn’t start with 70 points spike up off open, and NO, it’s not a channel down, it’s a range, and return into value after fakeout. Bears threw all they got, exhausted, waiting for God to push the market lower, right at PV (previous Value) 092, V (Value) 102, and PSL (previous session low) 076, levels where technical traders look for reversals. What came next was an intervetion? Or bears panic? Now the Bull has eaten, it can show its horns.

    2. “The indices were well on their way to having one of the worst technical days since 2008.”
      I watch the ticker for a few hours every day and I know nothing about the above? Have I missed anything? Maybe I am a blindfolded knight armed with my crash helmet and flash spike spear, ignoring the manipulated darkness around me?

  26. And who’s been buying DJIA yesterday at 080, will be selling at 380. Welcome back above daily 20ema!
    Excuse me fundamental approach guys, who are looking for bear flags or Fibo levels in a range….you’re violating the most basic technical principle, that there is NO BEAR or BULL flags in a range, if they appear, they turn to be traps!

  27. There was no intervention. $RUT and $COMPQ both finally hit 200-day MA a natural support that long term buyers step in.

    1. I suggest you study the SPX hourly chart. The reversal came right on cue as the index was on the cusp of breaking the lows of the previous two days. That would have set in motion an almost straight down move.
      Those around in the late 90’s would have seen or remember this type of action time and again.
      The PPT are not conspiracy stuff and are alive and well.

      1. As far as I am concerned , tests, retests are more common than break-outs and continuation, more so on lower time frame. In a range, fake-out is more common than break-out. The market doesn’t know itself where to go, and all this behaviour is finding out. I don’t know where the market goes either, and those who claim otherwise, are not professionals.

  28. The best trend days occur on Wednesdays and Thursdays, in the first and more in the second decade of the month, so we still have a potential to have some action this week, unfortunately Easter ahead, which can dampen volatility.

  29. I still did not close shorts. I will however consider it depending on what happens when SPX channel will be back-kissed.
    Remember Tuesday was special day as all Tuesdays are bullish since at least one year. Today is Wednesday and it can be different altogether. I think that if it was simple A-B-C correction then the triangle might form on larger scale.
    It is extremely dangerous to be long now, the trend is old and exhausted, as an old man, it can die any time.

    1. Forgot to add that stock indices action is irrelevant now as level of SPX correlation with USDJPY is now simply unbelievable. One day that machine driven world will collapse and exchanges will stay closed for many months like in 1914-1915

  30. There are indications that there is at least another leg down coming in the short term based on wave counts of a reliable indicator…same indicator that provided indications of a reversal around April 2-4th…

    1. Un coup-d’oeil and I might easily say that this time the indicator won’t work. As to SnP, Dow, the most likely is to stay in the April-March range. Also likely to test -reject range limits. Little likely to go away from the range. If the price chooses to go upwards from here, it may be done July 2013 style, which is not my favourite scenario, July 2013’s price action was lousy.
      The other thing is that all US indices look a bit different, so in case one index looks like breaking out, there will be a non-confirmation in the others, so a fakeout again. These markets for now are Going Nowehere.

  31. Why Tudor Jones Junior wanted to destroy all the copies of ‘Trader’ movie? Where he puts on his lucky trainers to help his millions worth position? Not to let the others see, that trading is gambling on probabilities?
    If anyone wants to see what’s in store for traders who know exactly where the market goes, watch “Rogue Trader: Nick Leeson” movie.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s